Avery Dennison Sales Decrease in First Quarter of 2023

Avery Dennison Corp. announced preliminary, unaudited results for its first quarter ended April 1, 2023. The company reported sales decreased 13% to $1.5 billion. Sales were down 9% ex. currency and on an organic basis.

“Earnings per share were in line with our expectations for the first quarter, despite lower revenue due to higher-than-anticipated inventory destocking,” said Mitch Butier, chairman and CEO. “We continue to expect a strong second half as the pace of destocking moderates and intelligent label programs accelerate. We have revised our guidance range for 2023 earnings per share to reflect a softer outlook for the second quarter."

“We remain confident that the consistent execution of our strategies will enable us to meet our long-term goals for superior value creation through a balance of profitable growth and capital discipline,” added Butier. “Once again, I want to thank our entire team for continuing to raise their game to address the unique challenges at hand.”

In the Materials Group, label materials sales were down by low-double digits on an organic basis. Lower volume, driven by inventory destocking, was partially offset by pricing actions. On an organic basis, sales were down low-double digits in North America, high-single digits in Western Europe, and mid-to-high single digits in emerging markets. Sales increased by low-single digits organically in the Graphics and Reflective Solutions businesses. Sales increased by mid-single digits organically in the combined Performance Tapes and Medical businesses. The company anticipates label destocking to be largely complete by mid-year, and Materials Group adjusted EBITDA margin improving sequentially throughout 2023.

In the Solutions Group, reported sales decreased 11% to $605 million. Sales were down 8% ex. currency and 9% on an organic basis. Sales in high-value categories were up low-single digits on an organic basis. Sales decreased by roughly 20% organically in base solutions as customers adjusted inventory levels. Reported operating margin decreased 480 basis points to 8.5%. Adjusted EBITDA margin decreased 340 basis points to 15.7% driven by lower volume.

The company anticipates apparel volume to rebound in the second half of 2023; throughout the year, Intelligent Labels programs are expected to accelerate and Solutions Group adjusted EBITDA margin to sequentially improve. The company announced an agreement to acquire Lion Brothers, a leading designer and manufacturer of apparel brand embellishments with sales of approximately $65 million in 2022.

The company has revised its guidance range for 2023 reported earnings per share from $8.85 to $9.25 to $8.35 to $8.70.

Learn more at www.averydennison.com.