Avery’s Profit Rises Amid Antitrust Probe
Avery Dennison Corp., the Pasadena label maker caught up in a federal antitrust investigation, reported 9.3% higher first-quarter earnings Tuesday, with favorable currency exchange rates offsetting the effects of a weak economy.
The profit of $70.8 million, or 71 cents a share, contrasts with $64.8 million, or 66 cents, a year earlier. Sales rose 23.5% to $1.15 billion from $931 million, mainly from acquisitions and exchange rates. Those factors aside, sales rose 4% on weak demand for office products but solid growth in label stock, the rolls of stick-on paper and clear film used to make labels.
Avery shares, which traded at more than $60 last week before the firm disclosed the Justice Department probe, rose 10 cents Tuesday to $50.44 on the New York Stock Exchange. Analysts seemed pleased to find no new disclosures about the inquiry.
“For now, it’s sort of a wait-and-see story,” said Ghansham Panjabi of Lehman Bros.
The Justice Department on April 14 sued to block a $420-million takeover of Bemis Corp.’s label stock operations by UPM-Kymmene of Finland, contending that UPM and the “leading producer” -- a reference to Avery’s 50% share of U.S. label stock sales -- “have already sought to reach explicit understandings aimed at limiting competition.”
The Justice Department told Avery it would be subpoenaed as part of a criminal inquiry into the industry. The subpoena has yet to arrive, said Avery, which recorded 15% of its 2002 revenue from U.S. sales of label stock.
