Jim Woods
O-I Corporate Communications
James.Woods@o-i.com
724.732.5748
O-I Glass will close at least six furnaces over the next nine months.
The announcement comes against a backdrop of reduced sales and sluggish consumer demand.
The company’s new CEO Gordon Hardie said the indefinite or permanent furnace closures represent about 4% of its capacity and would take place over the next three financial quarters.
“Since starting, I've read through the list of every capital project we've undertaken in 2023 and in the plan for 2024. It is clear to me that we can drive greater focus on capital discipline and drive better outcomes for the business,” he said.
In its latest financial report, the world’s largest container glass manufacturer said consumer consumption was sluggish and that net sales in the second quarter of 2024 were down 4.5% from the corresponding period last year.
Segment operating profit in the Americas was $106 million, down from $126 million in the prior year period primarily due to 8.5% lower sales volume. In Europe, operating profit $127 million, down from $200 million in the prior year period.
Despite the environment, year-over-year sales volume growth is expected in the second half of this year.
The company said destocking, which had begun after the pandemic period, had receded across most categories except spirits.
Announcing a programme called Fit to Win, Mr Hardie said the initiative would strengthen the company’s competitiveness and improve its performance from 2025.
“We have sufficient self-help opportunities over the next 18 months to drive greater profitability and returns to set the business up properly for a fuller market recovery in 2026 and 2027.
“We anticipate the productivity improvement from horizon one will deliver greater efficiency, margins and cash generation.
“We plan to accelerate the realignment of our commercial portfolio between global, regional and local customers and prioritise premium end segments in each category.
“We are currently under-indexed in premium, especially in spirits.”
By 2027 the company expects to generate adjusted EBITDA of at least $1.45 billion with EBITDA margins of 20% or higher, free cash flow of at least 5% of sales, and economic profit that is at least 2% above its cost of capital.
07.08.2024, OI
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