Avery Dennison Corp. met its own reduced earnings forecast Tuesday and lowered its forecast for the year, citing slower-than-expected sales growth and higher-than-expected costs.
The Pasadena-based label maker reported net income of $57.7 million (57 cents per share) for the quarter ended April 2, compared with $52.6 million (52 cents per share) for the year ago period. Revenues grew about 8 percent to $1.3 billion, compared with $1.2 billion for the year ago period.
The company warned in mid-April that its first quarter earnings would be about 10 cents lower than previously forecast. In early-afternoon trading Avery shares were down 1.3 percent to $51.77 each.
Higher raw material costs, combined with lower unit volume growth and a pricey new-product launch conspired to hurt the company's results, according to the company's press release.
Avery Dennison launched new radio frequency identification tags, RFID, which contributed to its $34 million increase in marketing and administration expenses over the same quarter last year. The new RFIDs also led to an increase in inventory reserves, another expense.
The company also took a 4 cent-per-share charge in the first quarter for a plant closure and the related severance and transition costs.
Avery Dennison reduced its revenue-growth target to 5 percent to 6 percent for the year, down from its previous guidance of 6 percent to 10 percent growth.
It also adjusted its earnings per share guidance for 2005 to $2.85 to $3.15 per share, a lowering of about 30 cents. The company said it was expecting continued inflation in raw materials prices.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Avery Profit Slides, Outlook Lowered
- Avery Dennison Reports Good Earnings, Bad Outlook
- Avery Dennison’s Quarter Exceeds Expectations
- Avery Expects Economy Will Lower 2008 Profits
- Avery Dennison Shares Surge on Strong Profit, Outlook
- Avery Falls to Fourth-Quarter Loss
- Avery Shares Sink on Acquisition Charges
- Avery Dennison Earnings Fall