US firm Avery Dennison posts net sales of $2.1 bn in Q2 FY23

The company's materials group reported sales decrease of 13 per cent to $1.5 billion. Sales, excluding currency and on an organic basis, were also down by 12 per cent. In this group, label materials sales fell by mid-teens organically, but the graphics and reflective solutions businesses saw an organic sales increase in the high-single digits. The reported operating margin decreased 150 basis points to 13.1 per cent, while the adjusted EBITDA margin was up 150 basis points sequentially to 15.7 per cent, albeit a 100 basis points decrease compared to the prior year, the company said in a press release.

In the solutions group, reported sales dipped 7 per cent to $615 million. Sales, excluding currency, were down 4 per cent, while organic sales decreased 7 per cent. Sales increased in the low-single digits on an organic basis in high-value categories, whereas they were down high-teens organically in base solutions, reflecting muted retailer and brand sentiment. The reported operating margin fell approximately 14 points to a negative 1.2 per cent, primarily due to an increased accrual for a legacy legal matter that the company is preparing for appeal. The adjusted EBITDA margin declined 320 basis points to 15.8 per cent.

Mitch Butier, chairman and CEO, said: “Earnings per share increased sequentially in the second quarter, a trend we expect to continue in coming quarters. Volumes in our materials businesses continue to recover from slow market conditions, largely destocking, while our intelligent labels platform accelerates adoption into new categories.

"While it's good to see the continuing sequential improvements in our materials businesses and the building momentum in intelligent labels, the pace of our recovery is slower than anticipated. Our results for the quarter were below our expectation due to lower revenue, something the team was able to largely offset through cost reduction actions.”

Fibre2Fashion News Desk (DP)