Avery Dennison Shares Down 3%

Despite an upbeat third-quarter earnings report Tuesday, Avery Dennison Corp.’s stock price tumbled 3% after the office products company warned of planned price increases that would have a negative effect on its fourth-quarter results.

The increases, which will be instituted through the fourth quarter and into the beginning of next year, are the result of rising petrochemical and paper costs for raw materials, the Pasadena-based company said.

Avery said it expected fourth-quarter earnings to be in the range of 74 cents to 80 cents a share. Analysts had been expecting “numbers in the high 70s to mid-80s,” said John E. Roberts, an analyst with Buckingham Research Group in New York.

“Their results will still be higher than for the prior fourth quarter, but not as robust as Wall Street had been expecting,” Roberts said. The analyst said he personally owns shares of Avery Dennison stock.

On Tuesday, Avery’s stock fell $1.97 to close at $60.75 on the New York Stock Exchange.

Avery posted a profit of $75 million, or 75 cents a share, in the third quarter ended Sept. 25, up 13% from $66.5 million, or 67 cents a share, in the same quarter a year earlier. The latest quarterly results were in line with analysts’ estimates.

Sales in the latest quarter rose 11% to $1.3 billion from $1.2 billion. The company said though sales rose in every segment, favorable exchange rates for overseas currencies, especially the euro, accounted for a third of the growth. The effect of the currency exchange benefit on earnings was only a penny a share.

The company’s sales volume increases were particularly strong in China, up 40%, and in Eastern Europe, up 20%, Avery said.

For the first nine months, Avery’s profit fell 6% to $196.1 million, or $1.95 a share, down from $208.6 million, or $2.08 a share, for the same period a year earlier.

Sales for the first nine months of $3.9 billion were up 11% from $3.5 billion a year earlier. The company said that almost half the revenue growth resulted from the favorable effect of foreign currency exchange.