Avery Dennison 2nd-Quarter Profit Up 7.2% on Sales, Margin Growth

   By Tess Stynes 
 

Avery Dennison Corp.'s (AVY) second-quarter earnings rose 7.2% as the maker of labels and tags reported revenue growth in its two main business segments and stronger margins.

For the year, the company narrowed its per-share earnings estimate to $2.50 to $2.70, from its previous estimate for $2.40 to $2.75.

Avery Dennison has been aiming to increase its focus on its businesses that make pressure-sensitive labels and coated films for various products. The company recently closed on its deal to sell its office- and consumer-products business and custom pressure-sensitive labels unit to CCL Industries Inc. (CCDBF, CCL.A.T, CCL.B.T) for $500 million. The deal came several months after U.S. regulatory pressure scuttled a $550 million deal to sell the office- and consumer-products division to 3M Co. (MMM).

"I'm pleased to report another quarter of strong earnings growth, driven by restructuring and other productivity actions we initiated last year," said President and Chief Executive Dean Scarborough said.

Avery Dennison reported a profit of $68.8 million, or 68 cents a share, up from $64.2 million, or 62 cents a share, a year earlier. Excluding asset write-downs and restructuring-related costs and other items, adjusted earnings from continuing operations were up at 71 cents from 53 cents.

Net sales increased 4.2% to $1.55 billion. On an organic basis, which typically excludes currency impacts, acquisitions and divestitures--sales were up 5%.

Analysts polled by Thomson Reuters most recently projected earnings of 70 cents on revenue of $1.54 billion.

Gross margin rose to 26.9% from 26%.

Avery Dennison said net sales at its pressure-sensitive-materials segment, the biggest contributor to the top line, were up 3.1% as label and packaging materials sales recorded growth in the mid-single digits on a percentage basis. Net sales at its retail-branding and information-solutions segment improved 7.3% amid increased demand from U.S. and European retailers and brands.

Shares closed Monday at $44.40 and were inactive premarket. The stock is up 27% this year.

Write to Tess Stynes at [e-mail]

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