“I’m happy to report another year of excellent progress toward our long-term goals,” said Dean Scarborough, Avery Dennison chairman, president and CEO. “We delivered a solid finish to a strong year, with higher-than-expected top-line growth, a significant increase in earnings, and solid free cash flow.
“Both of our core businesses beat their sales targets through innovation and share gain,” Scarborough added. “At the same time, they delivered outstanding margin expansion, further strengthening their competitive positions. I thank all the members of our global team for their contributions to these results.
“We will continue to deliver on our long-term financial commitments through top-line growth, margin expansion, and disciplined capital management, while returning significant cash to shareholders through dividends and share repurchase,” Scarborough said.
Fourth Quarter 2013 Results by Segment
Pressure-sensitive Materials (PSM) segment sales increased approximately 8%. Within the segment, Label and Packaging Materials sales increased mid-single digits. Combined sales for Graphics, Reflective, and Performance Tapes increased low double digits. Operating margin improved 180 basis points to 9.5% as the benefit of higher volume, lower restructuring costs, and productivity initiatives more than offset the impact of changes in product mix. Adjusted operating margin improved 100 basis points.
Retail Branding and Information Solutions (RBIS) segment sales increased approximately 3%, driven by increased demand from European retailers and brands. Operating margin increased 460 basis points to 7.4% as the benefit of productivity initiatives and higher volume, as well as the impact of a prior year impairment and a gain on sale of assets, more than offset higher employee-related expenses. Adjusted operating margin improved 140 basis points.
On July 1, 2013, the company completed the sale of its OCP and DES businesses. Net loss per share from discontinued operations was $(0.02) in the quarter.
Based on the factors listed and other assumptions, the company expects 2014 earnings per share from continuing operations of $2.60 to $2.90. Excluding an estimated $0.30 per share for restructuring costs and other items, the company expects adjusted (non-GAAP) earnings per share from continuing operations of $2.90 to $3.20.