Investments support O-I growth plans
"First quarter results were in-line with our guidance as the company commissioned new capacity to support future growth" said O-I CEO, Andres Lopez, commenting on the glass packaging producer’s first quarter 2019 results. "In addition, we announced future expansion at our Gironcourt, France plant, as well as a definitive agreement to acquire the Nueva Fanal operations in Mexico from ABI. All of these actions support key strategic customers, align O-I to attractive premium segments and will drive future profitable growth."
Net sales were $1.6 billion, compared with $1.7 billion last year. According to a company statement, a continued favourable pricing environment was more than offset by a decline in shipments and unfavourable currency translation. Europe and Asia Pacific reported higher segment operating profit year-on-year, while the Americas declined, due primarily to currency headwinds, as well as incremental costs to commission new capacity.
The Americas posted a segment operating profit of $113 million, which was $34 million lower than in the prior year period. Operating costs were higher than the first quarter of 2018, mostly reflecting cost inflation, as well as additional costs to commission new capacity for growth in Colombia and Brazil.
In Europe, operating profit was $79 million, compared with $72 million in the first quarter of 2018, an increase of $7 million. A favourable pricing environment and sales mix allowed the region to outpace cost inflation, while lower sales volumes adversely impacted profitability. Total System Cost efforts continue to contribute to improved profitability and more than offset the incremental costs related to capacity expansions.
O-I’s Asia Pacific segment first quarter operating profit was $8 million compared to $5 million in the first quarter of 2018. Operating costs improved year-over-year due to lower planned engineering activity. This was partially offset by the impact of lower sales volumes, as well as cost inflation that outpaced price.
"Our teams are aligned and energised like never before, executing growth with rigor and discipline” Andres Lopez added. “This, combined with our balanced capital allocation strategy, is expected to create significant value for our shareholders for years to come."