Sales for the first quarter of 2020 decreased 2.7% to $1,296.5 million, compared to $1,332.1 million for the first quarter of 2019, with 2.8% organic decline and 1.0% negative impact from foreign currency translation partially offset by 1.1% acquisition-related growth.
Operating income for the first quarter of 2020 was $200.3 million compared to $204.8 million for the comparable quarter of 2019. Operating income decreased 1.2%, excluding currency translation.
Restructuring and other items were a $1.8 million expense for the 2020 first quarter for severance costs associated with Checkpoint and other acquisition transaction costs associated with the six acquisitions closed in the first quarter.
“Our priority in this pandemic is to reduce risks to our people from COVID-19,” Geoffrey T. Martin, president and CEO, said. “A huge thank you to our business leaders and truly amazing employees who found innovative ways to work safely through this disruption, enabling us to do our part in those essential supply chains for the world’s consumers. Out of respect for employees impacted by temporary furlough or short time working in business units affected by lower demand in the lock down period, our Board of Directors agreed to perform its duties in May and June without fees, including our executive chairman, Don Lang, and myself, each of us working full time for zero net cash compensation during the same period.
“Given the diversity of our end markets, the financial impact of COVID-19 varies across the company,” Martin noted. “CCL Segment results were broadly in line with the prior year’s first quarter. CCL Design made significant gains with electronics customers experiencing unusual demand for computers and peripherals, offsetting slower automotive markets, effectively closed throughout April outside China.
“Home & Personal Care profitability improved on stronger demand for aerosols, compared to a weak prior year, but April orders fell for all products in specialty retail and salon channels,” he added. “Food & Beverage results declined versus an exceptional prior year, comparisons ease in the second quarter but many beverage customers are now reporting a collapse in ‘on premise’ demand.
“Healthcare & Specialty results improved in the United States and Europe but results declined in Canada and Asia Pacific; second quarter demand overall is strong. CCL Secure had an excellent first quarter but some countries since closed their currency printing operations as part of temporary lockdown procedures. Avery performance was strong on higher-margin mix and market share gains but direct-to- consumer name badge, wristband and kids’ label categories declined rapidly as March progressed. Closure of non-essential work places materially reduced April demand for all Avery product lines,” Martin observed.
“Checkpoint’s results improved in the Americas, offset by international declines on the shutdown of apparel manufacturing in China in February, the rest of Asia in March and subsequent retail store closures globally,” he noted. “With many technology projects in abeyance, Checkpoint’s April sales were significantly below prior year. Innovia film volume increased but revenues declined on mix and lower resin cost passed on to customers, especially in the United States.”