"As expected, first-quarter sales declined modestly on an organic basis, reflecting the slowdown in volume we began to experience in the second quarter of last year," says Dean Scarborough, Avery Dennison chairman, president and CEO. "Despite the lower sales and impact of raw material inflation, we increased operating profit through productivity initiatives and pricing. We are delivering on our commitment to return more cash to our shareholders, through share repurchases and the increased dividend.
"For the full year, we expect to increase earnings per share and free cash flow in line with our previous guidance, and to continue returning more cash to shareholders while maintaining our strong balance sheet," Scarborough says.
Additional results of the report by segment include:
Pressure-sensitive Materials (PSM):
• Operating margin improved 50 basis points to 8.8 percent due to productivity initiatives and pricing actions taken last year to offset higher raw material costs. Excluding costs associated with restructuring, operating margin improved by 40 basis points.
Retail Branding and Information Solutions (RBIS):
• Consistent with recent trends, sales declined approximately 4 percent, reflecting lower unit demand from retailers and brands in the U.S. and Europe.
• Operating margin declined 130 basis points to 2.0 percent as the impact of lower volume, as well as the effects of a prior year legal settlement and higher restructuring costs were partially offset by the net benefit of productivity initiatives. Excluding costs associated with restructuring and other items, operating margin declined by 60 basis points.
Other specialty converting businesses:
• Sales increased modestly due to pricing, partially offset by lower volume.
• Despite lower volume and higher costs associated with restructuring actions, operating margin improved 130 basis points to approximately break-even due to the benefit of pricing and productivity actions. Excluding costs associated with restructuring, operating margin improved by 280 basis points.
For further details, see the company's full report here.