Avery Dennison, a producer and marketer of apparel labels said its profits in the third quarter ending September 30, 2014 climbed 38 percent year-on-year.
Avery Dennison's third-quarter of 2014 profit rose to $64.3 million or $0.68 per share from $46.5 million or $0.47 per share from the corresponding quarter of 2013.
Revenues in the third quarter of 2014 rose slower by 4 percent to $1.56 billion from $1.50 billion from the prior year quarter and fell marginally short of analysts’ estimates of $1.57 billion.
Pressure-sensitive Materials (PSM) segment sales increased approximately 5 percent year-on-year and within the segment, label and packaging materials sales rose in mid-single digits.
While combined sales for graphics, reflective, and performance tapes too mounted in mid-single digits.
Operating margin of the PSM segment declined 10 basis points to 10.1 percent from a year ago, impacted by raw material input costs, which offset benefit of higher volume and productivity.
Sales at Retail Branding and Information Solutions (RBIS) division fell around 2 percent, reflecting softer demand from US-based apparel retailers and brands.
However, operating margin improved 220 basis points to 5.4 percent from higher productivity, lower restructuring costs, and lower incentive compensation.
In the first three quarters of 2014, Avery Dennison repurchased 5 million shares at an aggregate cost of $247 million and completed the sale of its OCP and DES businesses in July.
The effective tax rates for the third quarter and year-to-date were 36 percent and 32 percent, respectively. The adjusted tax rate for both the third quarter and year-to-date was 33 percent.
In the reporting quarter, Avery Dennison realized approximately $7 million in savings from restructuring, net of transition costs, and incurred restructuring costs of approximately $7 million.
During the full financial year, it expects to incur cash restructuring costs of approximately $55 million in 2014.
For full-year 2014, it has forecast earnings from continuing operations of $2.60 to $2.65 per share, and adjusted earnings from continuing operations of $3.00 to $3.05 per share.
CEO Dean Scarborough said, “We expect to deliver improved operational performance in the fourth quarter, with a reduction in the transition costs impacting PSM.”
“However, given recent top-line trends and headwinds from currency, we have modestly lowered our guidance for full-year adjusted earnings per share growth to approximately 13 percent,” he added.
The Board of Directors of Avery Dennison declared a quarterly cash dividend of $0.35 per share, which is payable on December 17, 2014, to shareholders of record on December 3, 2014.
Meanwhile, Avery Dennison also announced that it has promoted its current CFO - Mitchell Butier as President, who will continue to serve as CFO until a successor is named.
