USA – Material science and manufacturing company Avery Dennison has reported a 12% decline in net sales of US$2.1 billion for the first quarter (Q1) of fiscal year (FY) 2023, compared to US$2.34 billion in Q1 FY22.
As per the preliminary, unaudited results for Q1, which ended on 1 April 2023, the company’s Materials Group saw a nearly 13% decline in sales to US$1.5 billion and was 9% down both on exchange currency and an organic basis.
Meanwhile, Solutions Group’s sales went down by 11% to US$605 million and around 8% down on an exchange currency basis and 9% on an organic basis.
At the end of Q1, the company’s net debt to adjusted earnings before interest, taxes, depreciation, and amortization (non-GAAP) was 2.5%.
Avery Dennison realized around US$9 million in pre-tax savings from restructuring and net of transition costs as well as US$18 million from incurred pre-tax restructuring charges in Q1 FY23.
The company’s reported earnings per share (EPS) went down by 38% from US$2.39 in Q1 FY22 to US$1.49 in Q1 FY23.
Meanwhile, the adjusted non-GAAP EPS for the reported period was US$1.70, 29% lower than the previous year’s US$2.40.
Avery Dennison CEO and chair Mitch Butier said: “Earnings per share were in line with our expectations for the first quarter, despite lower revenue due to higher-than-anticipated inventory destocking.”
According to the newly forecasted guidance, reported EPS is expected to range between US$8.35 and US$8.70 instead of US$8.85 to US$9.25 stated in the previous forecast.
Lion Brothers acquisition
Meanwhile, the company has announced that it has entered into a final agreement to purchase Lion Brothers, a prominent company known for designing and producing brand identity systems for clothing.
The deal is expected to close in the second quarter of 2023, and Lion Brothers will become part of Avery Dennison’s Apparel Solutions business, expanding the Embelex portfolio.
This acquisition will allow both businesses to leverage Lion Brothers’ expertise, innovation, and service to boost Avery Dennison’s presence in high-value solutions and increase growth in external embellishments.
Lion Brothers, a Maryland-based company with sites in Hong Kong and China, had revenues of approximately US$65 million in 2022 and 450 employees.
The company is known for integrating creative design with scientific and technological advancements to produce product innovations for many prominent brands and companies.
The acquisition will enable Avery Dennison to expand its product offerings, add to its European portfolio, and increase its global team sports presence.
It will also allow both companies to build on their collective industry knowledge and provide better value to their stakeholders.
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