O-I Reports Full Year, Fourth Quarter 2018 Results

Owens-Illinois, Inc. reported financial results for the full year and fourth quarter ended Dec. 31, 2018.
 
Full-year net sales were $6.9 billion, an increase of $8 million from the prior year. Prices were 2% higher on a global basis, mainly due to favorable sales mix and ongoing cost inflation. Segment operating profit was $945 million in 2018, compared with $942 million in the prior year.
 
“In line with our guidance, the company delivered solid financial performance in 2018, demonstrating growing resilience in overcoming currency and inflationary headwinds,” CEO Andres Lopez said.
 
“Throughout 2018, Europe’s focus on the top line – sales mix management and premium products – and the benefits of Total System Cost efforts drove higher profits and strong margin expansion. Over the course of the year, the Americas team responded to several unplanned headwinds and the stronger US dollar by growing sales volume outside the US and reducing structural costs across the region. Asia Pacific completed its 2018 asset advancement program and exited the year with a strong margin, as expected. Given favorable market trends, ascribable growth opportunities, and continued structural cost reductions, the company expects higher earnings and cash flow generation in 2019, consistent with our Investor Day commitments,” Lopez added.
 
For the full year 2018, the company recorded earnings from continuing operations of $0.89 per share (diluted), compared with $1.11 per share in 2017. Excluding certain items management considers not representative of ongoing operations, adjusted earnings were $2.72 per share compared with the prior year of $2.65 per share.
 
Cash provided by continuing operating activities for 2018 was $793 million, compared with $724 million for 2017. Adjusted free cash flow for 2018 was $362 million.
 
The company’s joint venture with Constellation Brands, Inc., continues to perform well, again delivering higher sales compared with prior year, driven in part by the fourth furnace that ramped up early in 2018. The fifth furnace is expected to be completed by the end of 2019.
 
In 2019, the company expects to deliver higher earnings from continuing operations with higher segment operating profit partially offset by non-operational items. Earnings from continuing operations and adjusted earnings are expected to be approximately $3.00 per share, which compares favorably with results in 2018. Cash provided by continuing operating activities is expected to be approximately $740 million, whereas adjusted free cash flow for the year 2019 is expected to be approximately $400 million.
 
Fourth Quarter 2018 Results
 
Net sales in the fourth quarter of 2018 were $1.6 billion, down compared to the prior year fourth quarter. The decline in sales was driven by lower shipments in the quarter, including the transfer of production to the company’s joint venture with Constellation Brands. Europe offset some of the declines with strong gains in beer.
 
Segment operating profit was $211 million in the fourth quarter, essentially on par with prior year fourth quarter.
 
2019 Outlook
 
The company expects earnings from continuing operations, and adjusted earnings, for the full year 2019 to be approximately $3.00 per share, which compares favorably with results in 2018. The company expects cash provided by continuing operating activities for 2019 to be approximately $740 million and adjusted free cash flow to be approximately $400 million.