The company expects second quarter earnings per share to be between $0.64 and $0.69, and adjusted (non-GAAP) earnings per share to be between $0.74 and $0.79. The estimates reflect lower-than-expected volume, partially offset by lower employee-related expenses. Actual results are subject to finalizing several items, including a projected tax rate for the year in the high 20 percent range. Year-to-date free cash flow through the second quarter is expected to be approximately negative $165 million, reflecting lower operating results.
According to July 19 statement from the company, Avery Dennison now expects earnings per share for the full year 2011 between $2.25 and $2.55, and adjusted (non-GAAP) earnings per share between $2.45 and $2.75, assuming net sales of between $6.8 and $6.9 billion. These estimates reflect a reduction from the company’s previous earnings per share guidance, primarily due to lower volumes in the company’s largest segments.
“In the second quarter, volume in our two largest segments was negatively impacted as consumer packaged goods companies and apparel retailers and brands became more cautious about consumer sentiment and the impact of rising retail prices to offset inflation,” says Dean A. Scarborough, Avery Dennison’s chairman, president and CEO. “We are taking actions to offset the declines, and we expect to continue the momentum shown in 2010 and earlier this year when conditions improve.”