Avery Cuts Outlook for Year

Avery Dennison Corp., a maker of office products and adhesive labels, Tuesday posted a quarterly profit but said demand weakened as the quarter progressed.

Citing the slowdown in the first quarter and preliminary trends in the current quarter, the Pasadena-based company cut its full-year financial outlook.

“Although we started the year with strong sales growth, demand slowed significantly as the quarter progressed,” Avery Chairman and Chief Executive Philip Neal said, adding that the company was moving to cut costs. “Sales weakened across most businesses and regions late in the quarter.”

Avery earned $57.7 million, or 57 cents a share, in the first quarter, compared with $52.6 million, or 52 cents, a year earlier.

Excluding one-time items, it earned 61 cents a share, a penny below what analysts had expected, according to Reuters Estimates.

The company said it raised prices to offset raw material cost increases. However, the quarter was hurt by lower-than-expected unit volume growth, higher-than-anticipated spending related to growth plans and an increase in inventory reserves related to a product launch.

Sales rose 8% from last year to $1.35 billion, topping the $1.33 billion analysts had expected.

The company said it now expected 2005 sales to rise 5% to 6% instead of its previous forecast for growth of 6% to 10%. It also expects earnings of $2.85 to $3.15 a share, down from its previous forecast of $3.15 to $3.50 a share.

Avery shares closed down 86 cents at $51.61 on the New York Stock Exchange.