CORRECT: Avery Dennison 2Q Profit Drops 13% On Volume Declines

("Avery Dennison 2Q Profit Drops 13% On Volume Declines," published at 8:49 a.m. EDT, erroneously attributed price increases to Avery rather than its consumer-oriented customers. A correct version follows.)

Avery Dennison Corp.'s (AVY) second-quarter profit sank 13% as lower volumes in its two largest segments dragged on revenue.

The office-supply and labeling manufacturer said last week that decreased volumes would hurt its second-quarter results after lower-than-expected sales in its pressure-sensitive materials and retail branding segments. At the same time, inflation has hurt the company in recent months as rising raw materials costs trim its margins.

"We are taking action to reduce costs and increase productivity through this slowdown, and we expect to regain momentum when market conditions improve," Chairman and Chief Executive Dean Scarborough said Tuesday.

Avery has also said that the apparel and packaged goods companies it serves are wary of boosting retail prices to offset inflation.

The company reported a second-quarter profit of $73.3 million, or 69 cents a share, down from $83.8 million, or 78 cents a share, a year earlier. Excluding restructuring costs and other charges, per-share earnings were 78 cents, down from 94 cents. Revenue grew 2.7% to $1.73 billion but fell about 2% on an organic basis.

The company last week predicted per-share earnings between 74 cents and 79 cents on revenue of $1.7 billion, well below analysts expectations at the time.

Gross margin narrowed to 27.3% from 29.2% on higher costs and slower revenue growth.

Shares closed at $33.34 Monday and were mostly inactive premarket. The stock is off 21% this year.

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; [e-mail]