O-I Reports 3Q 2018 Results

Owens-Illinois, Inc. (OI) reported financial results for the third quarter ended Sept. 30, 2018.
 
“Our third quarter results were in line with management’s guidance, despite headwinds from foreign currency and transitory volume trends,” said Andres Lopez, CEO. “Our European operations profited from ongoing favorable sales mix, pricing dynamics and continued cost reduction efforts. In the Americas, O-I demand for glass was modestly positive when incorporating the strong year-on-year performance of our joint venture with CBI. In Asia Pacific, we successfully completed our asset advancement projects for the year and will return the region to more normalized margins in the fourth quarter. Building on a solid foundation at O-I, we expect renewed growth in sales, margins, earnings, and cash flow in 2019 and beyond.”
 
Net sales were $1.7 billion, which was 3% lower than prior year third quarter, largely due to the adverse impact of the stronger US dollar. Shipments declined compared with prior year, primarily due to the transfer of production to its joint venture with Constellation Brands and the impact of the poor 2017 grape harvest in Europe. These headwinds were partially offset by price gains, which were reported in all segments.
 
Earnings from continuing operations before income taxes were $168 million for the third quarter compared with $172 million for the same period in 2017. Segment operating profit of reportable segments for the third quarter of 2018 was $255 million, $5 million lower than prior year period.
 
Net sales in the third quarter of 2018 were $1.7 billion, which was 3% lower than prior year third quarter. The impact of currency adversely impacted net sales by 3%. Global sales shipments were down 2% compared with prior year. Sales in Europe were lower than the prior year, despite higher shipments to non-alcoholic beverage customers. Shipments to wine customers declined due to the weak grape harvest in the prior year and to food customers due to mix management.
 
Within the Americas, lower shipments in the US – owing to shifting production to the JV with CBI and to ongoing trends in beer – were largely offset by gains reported in nearly every other country. Shipments in Asia Pacific were lower year-on-year, largely due to Australia, which had strong sales in the comparable period; shipments in the rest of the region were up nearly 10% compared with prior year.
 
The company’s joint venture with Constellation Brands, Inc., continues to perform well, again reporting higher sales compared with prior year, driven in part by the fourth furnace that ramped up earlier this year. The fifth furnace is expected to be operational by the end of 2019.
 
Segment operating profit was $255 million in the quarter, compared with $260 million in the same period of 2017. This decline was largely attributed to the $9 million unfavorable effects of foreign exchange currency rates.
 
The company expects cash provided by continuing operating activities for 2018 to be in the range of $750 million to $775 million and adjusted free cash flow to be in the range of $350 million to $375 million.