Avery Dennison Corp. (AVY: Quote) Wednesday reported a better-than-expected jump in fourth-quarter profit, driven by growth at its Pressure-sensitive Materials, and Retail Branding and Information Solutions businesses, as well as improved margins.
The company also provided a strong earnings outlook for the full year 2013.
Avery Dennison also said it has agreed to sell its Office and Consumer Products, and Designed and Engineered Solutions businesses to Canada-based CCL Industries Inc. (CCL_A.TO: Quote, CCL_B.TO) for $500 million in cash, a move that would enable added focus on its pressure-sensitive materials business. The deal is expected to be completed mid-2013.
Shares of Avery Dennison gained about six percent in morning trade on the New York Stock Exchange, while CCL shares gained more than 14 percent in Toronto.
Pasadena, California-based Avery Dennison reported fourth-quarter net sales of $1.53 billion, up 5 percent from $1.45 billion last year. On average, five analysts polled by Thomson Reuters estimated revenues of $1.47 billion for the quarter.
Operating margin for the quarter improved to 4.8 percent from 3.8 percent a year ago.
Net income for the fourth quarter jumped to $49 million or $0.48 per share from $22 million or $0.21 per share last year.
Excluding items, adjusted earnings from continuing operations for the quarter were $54.6 million or $0.54 per share, compared with $38 million or $0.36 per share last year. Analysts on consensus estimated earnings of $0.49 per share for the quarter. Analysts’ estimates typically exclude special items.
For the full year 2013, Avery Dennison expect earnings from continuing operations of $2.23 to $2.63 per share, and adjusted earnings from continuing operations of $2.40 to $2.80 per share. Analysts currently estimate earnings of $2.37 per share for the year.
Avery Dennison’s deal with CCL comes just months after 3M Co. dropped its $550 million offer to buy the company’s office and consumer products business due to anti-trust fears. Avery Dennison plans to use the expected net proceeds of the deal to repurchase shares and make an additional pension contribution.
Avery Dennison’s Office and Consumer Products business supplies printable media and other products, with 2012 sales of about $730 million. The Designed and Engineered Solutions unit makes custom pressure-sensitive labels and coated films and had 2012 sales of nearly $180 million.
Avery Dennison is trading at $38.28, up 5.92%, on a volume of 1.8 million shares on the NYSE.
In Toronto, CCL_B.TO is trading at C$52.50, up 14.83%.
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by RTT Staff Writer
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