“Our Q2 earnings were in line with our expectations, as we more than offset softer-than-expected organic growth with accelerated productivity actions,” said Mitch Butier, president and CEO. “High value categories continue to grow faster than the base business, which, combined with our relentless focus on productivity, enable margin expansion even in a slower growth environment.
“Organic growth in Label and Graphic Materials remained soft reflecting lower volume, while profitability was strong. Retail Branding and Information Solutions delivered solid organic growth, driven by continued strength in RFID, with significant margin expansion. Likewise, IHM continued to deliver strong margin improvement, despite flat organic growth.
Label and Graphic Materials sales declined 4.1%; on an organic basis, sales grew 0.9%, as prior year pricing actions more than offset a modest decline in volume. Reported operating margin increased 420 basis points to 13.4%.
Retail Branding and Information Solutions sales increased 0.4%; on an organic basis, sales grew 4.4%, driven primarily by continued strength in sales of radio frequency identification (RFID) solutions, which increased more than 20%. Reported operating margin increased 110 basis points to 12%, as productivity and higher volume more than offset higher employee-related costs and growth-related investments.
Industrial and Healthcare Materials sales declined 5%; on an organic basis, sales declined 0.1%, as a low-single digit decline in industrial categories was largely offset by a mid-single digit increase in healthcare categories. Reported operating margin increased 40 basis points to 9.6% as productivity and a net benefit of pricing and raw material costs more than offset higher restructuring and employee-related costs.