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Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited fourth quarter and full-year 2012 results. All non-GAAP financial measures referenced in this document are reconciled to GAAP in the attached tables. Unless otherwise indicated, the discussion of the company’s results is focused on its continuing operations, and comparisons are to the same period in the prior year.
“Avery Dennison delivered strong earnings improvement in 2012,” said Dean Scarborough, Avery Dennison chairman, president and CEO. “Both Pressure-sensitive Materials and Retail Branding and Information Solutions delivered solid sales growth and expanded margins, and we returned $346 million of cash to shareholders through share repurchases and an increased dividend.
“We also took actions that position us well for significant profit growth in 2013, even in a soft economic environment,” Scarborough said. “We remain committed to delivering on our long-term goals, including double-digit earnings growth and higher returns.”
For more details on the company’s results, see the summary table accompanying this news release, as well as the supplemental presentation materials, “Fourth Quarter and Full-Year 2012 Financial Review and Analysis,” posted on the company’s website at www.investors.averydennison.com, and furnished on Form 8-K with the SEC.Fourth Quarter 2012 Results by Segment
All references to sales reflect comparisons on an organic basis, which exclude the estimated impact of currency translation, acquisitions and divestitures. Adjusted operating margin refers to earnings before interest expense and taxes, excluding restructuring costs and other items, as a percentage of sales.
Prior period amounts have been realigned to reflect the company’s new operating structure, which includes a new corporate expense allocation methodology.
Pressure-sensitive Materials (PSM)The PSM segment now includes the Performance Tapes business, previously reported in other specialty converting businesses.
PSM segment sales increased approximately 6 percent. Within the segment, Label and Packaging Materials sales increased mid-single digits, as did the combined sales for other product lines (Graphics, Reflective, Performance Tapes).
Operating margin improved 100 basis points to 7.8 percent as the benefit of higher volume and productivity initiatives more than offset the impact of changes in product mix and higher employee-related expenses. Adjusted operating margin improved 100 basis points.
Retail Branding and Information Solutions (RBIS)The RBIS segment now includes all of the radio-frequency identification (RFID) business, previously reported in other specialty converting businesses.
Sales increased approximately 10 percent compared to prior year driven by increased demand from U.S. and European retailers and brands, including accelerating RFID adoption.
Operating margin improved 120 basis points to 3.0 percent as the benefit of higher volume and productivity initiatives more than offset higher employee-related expenses and an impairment charge. Adjusted operating margin improved 270 basis points.
Other specialty converting businessesAs indicated above, other specialty converting businesses no longer include the Performance Tapes and RFID businesses.
Sales increased approximately 15 percent due to higher volume.
Operating margin declined 70 basis points to 2.3 percent due to the impact of a prior year gain on sale of a product line, as well as current year costs associated with exiting product lines and restructuring, partially offset by the benefit of higher volume. Adjusted operating margin improved by more than 12 points to 6.4 percent.
The company repurchased 7.9 million shares during 2012 at an aggregate cost of $235 million (approximately 7 percent of shares outstanding).