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Released November 01, 2013 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Owens-Illinois Incorporated (NYSE:OI) (O-I) (Perrysburg, Ohio), the world's largest glass container manufacturer, reported net sales of $1.78 billion for third-quarter 2013, a 2% increase from third-quarter 2012, in a webcast on October 31, 2013. The increase was credited to growth in all geographic segments except South America, where the uncertain economic atmosphere had left its footprint.
Industrial Info is currently tracking 18 projects worth more than $306 million involving Owens-Illinois, including the Dongtai glass container manufacturing plant in Jiansu, China. The $156 million grassroot project will involve the construction of 20 new product lines and four glass furnaces to produce 400,000 tons per year of glass containers. The project is set to be complete in June 2014.
"Overall, our operations delivered strong results for the quarter, and we again benefited from our broad geographic footprint," said Al Stroucken, chairman and chief executive officer, in a press release. "Growth in sales volume in Europe, North America and Asia-Pacific outweighed the decline in South America. We are on track with our global structural cost reduction and European asset optimization programs, both of which continue to deliver benefits. And we continued with our disciplined approach to capital allocation, as evidenced by our share repurchases and debt pay-down in the quarter."
The European segment posted higher volumes for the first time in seven quarters. Increased demand in wine and non-alcoholic beverages were attributed to a new effort to win back wine customers. A slight uptick in beer and an extra shipping day in the quarter also contributed to growth. The extra shipping day alone accounted for a 2% increase. The second quarter weather also added to the increase in the third. The delayed harvest pushed some second-quarter volume to the third, driving food volume to double-digits.
In North America, increased beer sales and non-alcoholic beverages provided a 16% operating growth. Plants such as those in Windsor, Colorado, and Portland, Oregon, produce glass containers for bottling, packing and canning. These have assisted in sales volume gains and costs savings for the company.
The South American sales decline is a result of a macroeconomic slowdown and a transportation strike, which prevented deliveries and forced a plant to idle. Customers have delayed investments in returnables and beer due to the uncertainty of the economy.
"Remember that through the decades in South America, we have faced many slowdowns of short duration," Stroucken said in the webcast. "And we will continue to adapt to evolving business conditions in real time as we enter into South America's high season...We are very confident that we will get back on track very soon."
The Asia-Pacific segment had consistent volumes throughout the quarter, with significantly higher operating profits. China's volumes showed no substantial increase or decrease; however, this was offset by strong volumes in Southeast Asia. The weakening Australian dollar was reflected in weakening wine demand.
The company is fulfilling its resolution to cut-down on debt and increase free cash flow. In the third quarter, $168 million in debt was repaid, along with $10 million in repurchased shares. Additionally, O-I has reaffirmed its outlook of $300 million in free cash flow for 2013.
"We expect market demand in North America and Europe to be sluggish, but stable," Stroucken said in regards to the fourth quarter outlook. "As we have limited visibility into the uncertain macroeconomic conditions in South America, our plans anticipate no growth there in the fourth quarter. Irrespective of external challenges, we are focusing on the levers within our control: managing production volatility, reducing structural costs and optimizing our assets. We are confident, therefore, that we will deliver higher full-year earnings and free cash flow."
For more information, visit Industrial Info's Metals & Minerals Database.
View Plant Profile - 3075304 1016172 1060278
View Project Report - 300095038
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Industrial Info is currently tracking 18 projects worth more than $306 million involving Owens-Illinois, including the Dongtai glass container manufacturing plant in Jiansu, China. The $156 million grassroot project will involve the construction of 20 new product lines and four glass furnaces to produce 400,000 tons per year of glass containers. The project is set to be complete in June 2014.
"Overall, our operations delivered strong results for the quarter, and we again benefited from our broad geographic footprint," said Al Stroucken, chairman and chief executive officer, in a press release. "Growth in sales volume in Europe, North America and Asia-Pacific outweighed the decline in South America. We are on track with our global structural cost reduction and European asset optimization programs, both of which continue to deliver benefits. And we continued with our disciplined approach to capital allocation, as evidenced by our share repurchases and debt pay-down in the quarter."
The European segment posted higher volumes for the first time in seven quarters. Increased demand in wine and non-alcoholic beverages were attributed to a new effort to win back wine customers. A slight uptick in beer and an extra shipping day in the quarter also contributed to growth. The extra shipping day alone accounted for a 2% increase. The second quarter weather also added to the increase in the third. The delayed harvest pushed some second-quarter volume to the third, driving food volume to double-digits.
In North America, increased beer sales and non-alcoholic beverages provided a 16% operating growth. Plants such as those in Windsor, Colorado, and Portland, Oregon, produce glass containers for bottling, packing and canning. These have assisted in sales volume gains and costs savings for the company.
The South American sales decline is a result of a macroeconomic slowdown and a transportation strike, which prevented deliveries and forced a plant to idle. Customers have delayed investments in returnables and beer due to the uncertainty of the economy.
"Remember that through the decades in South America, we have faced many slowdowns of short duration," Stroucken said in the webcast. "And we will continue to adapt to evolving business conditions in real time as we enter into South America's high season...We are very confident that we will get back on track very soon."
The Asia-Pacific segment had consistent volumes throughout the quarter, with significantly higher operating profits. China's volumes showed no substantial increase or decrease; however, this was offset by strong volumes in Southeast Asia. The weakening Australian dollar was reflected in weakening wine demand.
The company is fulfilling its resolution to cut-down on debt and increase free cash flow. In the third quarter, $168 million in debt was repaid, along with $10 million in repurchased shares. Additionally, O-I has reaffirmed its outlook of $300 million in free cash flow for 2013.
"We expect market demand in North America and Europe to be sluggish, but stable," Stroucken said in regards to the fourth quarter outlook. "As we have limited visibility into the uncertain macroeconomic conditions in South America, our plans anticipate no growth there in the fourth quarter. Irrespective of external challenges, we are focusing on the levers within our control: managing production volatility, reducing structural costs and optimizing our assets. We are confident, therefore, that we will deliver higher full-year earnings and free cash flow."
For more information, visit Industrial Info's Metals & Minerals Database.
View Plant Profile - 3075304 1016172 1060278
View Project Report - 300095038
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
