“The company has been on a transformational journey and has made meaningful progress over the past three years. However, the second quarter was a challenging period for O-I. Earnings fell short of management’s guidance as sales volumes were essentially flat with last year compared to our expectation of modest growth. Despite encouraging demand trends in April and May, June shipments were softer than anticipated including the impact of extreme weather conditions in Europe,” said Andres Lopez, CEO. “We also incurred higher than expected costs in the Americas related to the commissioning of a furnace at a joint venture as well as unplanned downtime due to flooding and weather-related issues. While 2019 is turning out to be a difficult year, we believe many of these factors are temporary and we are taking action to accelerate performance.”
Net sales in the second quarter of 2019 were $1.8 billion and essentially flat with the prior year second quarter. Prices were up approximately 2.5%, reflecting the pass through of cost inflation and changes in sales mix. The benefit of higher prices was offset by unfavorable foreign currency translation. Sales volume growth was strong in the markets where O-I recently commissioned new capacity, including Brazil, Colombia and China.
For the second quarter 2019, earnings from continuing operations were $0.42 per share (diluted), compared with $0.31 per share (diluted) in 2018. Excluding certain items management considers not representative of ongoing operations, adjusted earnings were $0.69 per share, compared with $0.77 per share in 2018.
Net sales were $1.8 billion, essentially flat with the prior year second quarter. Higher prices were offset by unfavorable foreign currency translation while sales volumes were essentially flat with the prior year.
Earnings from continuing operations before income taxes were $98 million, compared to $78 million in the second quarter of 2018. This improvement reflects lower restructuring charges in the second quarter of 2019 than in the prior year.
Segment operating profit was $236 million, which compares to $255 million in the second quarter of 2018. While the benefit of higher selling prices more than offset cost inflation, operating costs were higher than the prior year.