Avery Dennison has announced preliminary, unaudited results for its fourth quarter and full year, which ended on January 3, 2015.

“I’m happy to report another year of solid progress toward our long-term goals, and I want to thank our employees for their contributions to our ongoing success,” says Dean Scarborough, Avery Dennison chairman and CEO. “In 2014, we delivered 16% growth in adjusted earnings per share, significantly increased return on capital and distributed over $480 million of cash to shareholders.

Fourth Quarter 2014 results by segment

Pressure-sensitive materials (PSM)
The PSM segment increased approximately 2%. Within the segment, label and packaging materials increased by low single digits, and combined sales of graphics and performance tapes increased by mid-single digits.

Operating margin improved 60 basis points to 10.1%, as the benefit from productivity initiatives and higher volume was partially offset by the net impact of raw material input costs and pricing along with higher restructuring costs. Adjusted operating margin improved 100 basis points.

“Pressure-sensitive materials delivered its third consecutive year of strong volume growth, while maintaining its profitability and high return on capital,” adds Scarborough. “We are taking further actions to improve PSM’s long-term competitive position as we continue to invest in growth.

Retail Branding and Information Solutions (RBIS)
RBIS segment sales were down approximately 5% due to lower volume in Europe and North America.

Operating margin declined 190 basis points to 5.5%, as the impact of lower volume, a prior year gain on sale of assets and other factors more than offset the benefit from productivity initiatives and lower employee costs. Adjusted operating margin declined 70 basis points.

“Retail Branding and Information Solutions faced top-line growth challenges this year, reflecting share loss in the value and contemporary segments of the market, offset by solid growth in RFID and the performance segment,” explains Scarborough. “We are focusing our sales efforts to recapture share, while reducing fixed costs and aligning resources to better serve all segments of the market. We expect to see an improvement in our growth trajectory by mid-year and to resume our strong record for margin expansion, with no change to our 2018 goals for the business.”

Other

The company repurchased 7.4 million shares in 2014 at an aggregate cost of $356 million.

Regarding income taxes, the full year tax rate was 31.1%, which was below previous expectations of 33%. This was due primarily to benefits associated with tax planning in the fourth quarter. The tax rate in 2015 is expected to be in the low- to mid-30% range.

In 2014, the company realized approximately $35 million in savings from restructuring, net of transition costs and incurred restructuring costs of approximately $66 million. Cash charges accounted for $55 million.

Avery Dennison expects 2015 earnings per share of $2.95 to $3.15. Excluding an estimated $0.25 per share for restructuring costs and other items, the company expects adjusted (non-GAAP) earnings per share of $3.20 to $3.40.

“We expect to increase earnings per share in 2015, despite a significant headwind from currency translation,” says Scarborough. “We remain committed to achieving our long-term financial targets, growing through innovation and differentiated quality and service, with a continued focus on cost and capital discipline.”