Avery says net income slips
Label maker Avery Dennison Corp. reported a lower third-quarter profit Tuesday as charges offset higher-than-expected sales growth.
The Pasadena-based company reported net income of $85 million, or 85 cents a share, compared with $86.2 million, or 86 cents, in the same period a year earlier.
Excluding one-time charges for restructuring costs and environmental remediation, Avery earned 98 cents a share, 2 cents higher than the average estimate of analysts polled by Thomson Financial.
Sales increased 5% to $1.42 billion, above Wall Street’s forecast of $1.40 billion. Excluding the effect of acquisitions, divestitures and foreign currency translation, sales grew 4%.
“Notwithstanding the impact of an environmental reserve that reduced our reported earnings, we delivered solid operational results in the third quarter and are on track to achieve our goals in 2006,” Chief Executive Dean A. Scarborough said.
Analyst George Staphos of Banc of America Securities called the results “somewhat mixed,” noting that profits at units such as consumer products came in below his expectations.
Avery shares closed down $1.13 at $62.17 after falling as much as $1.73 during the session.
The company reported solid growth in overseas markets, particularly in developing regions such as Latin America and Asia. Price increases helped the company offset higher raw material and energy costs, and the company said it enjoyed “a great back-to-school season,” with sales of Avery-brand products up significantly.
Playing against these gains were shrinking sales to the troubled automotive and home-building industries.
Avery adjusted its full-year per-share earnings guidance -- excluding one-time items -- to a range of $3.67 to $3.77 from a range of $3.60 to $3.80. On this basis, analysts were forecasting $3.70.
Avery lowered its full-year net income estimate to a range of $3.56 to $3.68 a share, down from $3.58 to $3.81, the result of the environmental charge and updated estimates for restructuring costs and stock option expenses.