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| ‘Our end-markets remain soft’ - Avery Dennison President | | October 29, 2009 (USA) |  |
 Avery Dennison Corporation announced preliminary third quarter 2009 results.
“In the face of continuing tough market conditions we increased operating margin, reflecting the strength of our franchise businesses and the effectiveness of our operating model,” said Dean A. Scarborough, president and chief executive officer of Avery Dennison. “The combination of fixed-cost reductions and increasing variable margins positions the Company for strong profit growth when markets improve.”
“While the rate of volume decline in the third quarter improved compared with the first half of the year, this was largely due to a slowdown in inventory reductions,” Scarborough said. “Our end-markets remain soft, and we continue to be cautious about the pace of their recovery.”
“I want to note the excellent performance of our employees in such uncertain times,” Scarborough said. “They have maintained their focus on serving our customers, operating our businesses, and laying the groundwork for the future. This has been hard work, and they’ve done a tremendous job.”
Third Quarter, 2009 Results by Segment
All references to sales reflect comparisons on an organic basis, which exclude the impact of acquisitions and foreign currency translation. All references to operating margin exclude the impact of restructuring, asset impairment charges, lease cancellation costs, and other items.
Pressure-sensitive Materials (PSM)
Roll Materials sales declined, reflecting weakness in end-markets. Sales continued to decline in the more economically sensitive Graphics and Reflective Products division.
Operating margin increased as productivity offset the impact of reduced fixed-cost leverage, while the effects of pricing and raw material trends continued to cover the cumulative impact of 2008 inflation.
Retail Information Services (RIS)
The decline in sales primarily reflected reduced demand for apparel in the U.S. and in Europe, and caution on the part of retailers.
The decline in operating margin reflected reduced fixed-cost leverage, pricing, and other factors that more than offset the benefit of restructuring and productivity actions.
The Company is continuing initiatives to reduce fixed costs in light of current market conditions, while introducing new products and improving value-added services to increase its share of this large market.
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