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'Our end-markets remain soft' - Avery Dennison President
29 Oct '09
4 min read
Office and Consumer Products (OCP)
The decline in sales reflected weak end-market demand, led by slower corporate purchase activity. The sales decline was partially offset by strong back-to-school sales, due in part to expanded distribution and consumer trade-up to more durable binders.
Operating margin declined as the benefit of productivity actions was more than offset by the impact of reduced fixed-cost leverage.
Other specialty converting businesses
The decline in sales is primarily attributable to lower volume of products sold to the housing and construction industries.
The increase in operating margin reflected restructuring and productivity improvements that more than offset reduced fixed-cost leverage.
Consolidated Items and Actions
In the fourth quarter of 2008, the Company began a restructuring program expected to reduce costs across all segments of the business. The Company is targeting $160 million in annualized savings by mid-2010 (estimating $75 million benefit, net of transition costs, in 2009). The Company estimates that it will incur approximately $130 million of total restructuring charges associated with these actions, with approximately $110 million to be incurred in 2009. In addition to the savings from these new actions, the Company expects approximately $40 million of carryover savings in the year from previously implemented actions.
At the end of the third quarter of 2009, the Company achieved run-rate savings representing approximately 70 percent of its restructuring target.
The effective tax rate in the third quarter was negative 7 percent, while the adjusted tax rate was positive 7.5 percent. The effective and adjusted tax rates for the full year are expected to be in the low single-digits and low double-digits, respectively. The ongoing annual tax rate is expected to be in the low 20 percent range, varying significantly from quarter to quarter.
Avery Dennison is a recognized industry leader that develops innovative identification and decorative solutions for businesses and consumers worldwide. The Company's products include pressure-sensitive labeling materials; graphics imaging media; retail apparel ticketing and branding systems; RFID inlays and tags; office products; specialty tapes; and a variety of specialized labels for automotive, industrial and durable goods applications. A FORTUNE 500 Company with sales of $6.7 billion in 2008, Avery Dennison is based in Pasadena, California and has employees in over 60 countries.
The decline in sales reflected weak end-market demand, led by slower corporate purchase activity. The sales decline was partially offset by strong back-to-school sales, due in part to expanded distribution and consumer trade-up to more durable binders.
Operating margin declined as the benefit of productivity actions was more than offset by the impact of reduced fixed-cost leverage.
Other specialty converting businesses
The decline in sales is primarily attributable to lower volume of products sold to the housing and construction industries.
The increase in operating margin reflected restructuring and productivity improvements that more than offset reduced fixed-cost leverage.
Consolidated Items and Actions
In the fourth quarter of 2008, the Company began a restructuring program expected to reduce costs across all segments of the business. The Company is targeting $160 million in annualized savings by mid-2010 (estimating $75 million benefit, net of transition costs, in 2009). The Company estimates that it will incur approximately $130 million of total restructuring charges associated with these actions, with approximately $110 million to be incurred in 2009. In addition to the savings from these new actions, the Company expects approximately $40 million of carryover savings in the year from previously implemented actions.
At the end of the third quarter of 2009, the Company achieved run-rate savings representing approximately 70 percent of its restructuring target.
The effective tax rate in the third quarter was negative 7 percent, while the adjusted tax rate was positive 7.5 percent. The effective and adjusted tax rates for the full year are expected to be in the low single-digits and low double-digits, respectively. The ongoing annual tax rate is expected to be in the low 20 percent range, varying significantly from quarter to quarter.
Avery Dennison is a recognized industry leader that develops innovative identification and decorative solutions for businesses and consumers worldwide. The Company's products include pressure-sensitive labeling materials; graphics imaging media; retail apparel ticketing and branding systems; RFID inlays and tags; office products; specialty tapes; and a variety of specialized labels for automotive, industrial and durable goods applications. A FORTUNE 500 Company with sales of $6.7 billion in 2008, Avery Dennison is based in Pasadena, California and has employees in over 60 countries.
Avery Dennison
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