Avery Dennison Q2 Profit Up 7%, Narrows Full-year Adj. Earnings Outlook

(RTTNews) - Labeling and packaging materials company Avery Dennison Corp. (AVY) on Tuesday reported a 7 percent increase in profit for the second quarter, aided by higher revenues at its two main business segments. Looking ahead, the company tightened its adjusted earnings from continuing operations outlook for fiscal 2013.

Dean Scarborough, Avery Dennison chairman, president and CEO said, "Pressure-sensitive Materials continued to benefit from its leadership position in emerging markets, growth through innovation, and significant productivity gains. Retail Branding and Information Solutions delivered its fourth consecutive quarter of strong sales growth with continued margin expansion in the first half."

Pressure-sensitive Materials or PSM segment recorded a 3 percent increase in sales for the second quarter to $1.11 billion. Within the segment, Label and Packaging Materials sales increased mid-single digits. Combined sales for Graphics, Reflective, and Performance Tapes increased low single digits.

Retail Branding and Information Solutions or RBIS segment sales rose 7 percent to $419.6 million, driven by increased demand from U.S. and European retailers and brands. Meanwhile, Other specialty converting businesses reported a 1 percent decline in sales to $18.8 million.

Avery Dennison's second-quarter net income increased to $68.8 million or $0.68 per share from $64.2 million or $0.62 per share in the year-ago period.

Adjusted net income from continuing operations was $71.8 million or $0.71 per share, compared to $55.7 million or $0.53 per share in the year ago quarter. On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 4 percent to $1.55 billion from $1.49 billion in the prior-year quarter. Analysts had a consensus revenue estimate for the quarter of $1.54 billion.

Gross margin for the quarter rose to 26.9 percent from 26 percent in the previous-year quarter, while operating margin increased to 8.0 percent from 6.2 percent in the same period last year.

On July 1, 2013, Avery Dennison completed the sale of its Office and Consumer Products or OCP, and Designed and Engineered Solutions or DES businesses to Canada-based CCL Industries Inc. (CCL_A.TO, CCL_B.TO) for $500 million. The company expects net proceeds from the sale of about $400 million, which it plans to use to repurchase shares and reduce debt, including an additional pension plan contribution.

Looking ahead to fiscal 2013, Avery Dennison now expects earnings per share from continuing operations in a range of $2.40 to $2.60, up from the prior range of $2.23 to $2.58.

Excluding an estimated $0.10 per share for restructuring costs and other items, net of gain on sale of assets, the company expects adjusted earnings per share from continuing operations for the year of $2.50 to $2.70. This compares to the company's prior outlook in a range of $2.40 to $2.75 per share. Analysts expect the company to report earnings of $2.58 per share for the year.

In Tuesday's regular trading session, AVY is trading at $45.23, up $0.83 or 1.83 percent on a volume of 324,418 shares.