O-I Glass(OI) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported first quarter adjusted earnings of $0.40 per share, down from the previous year but exceeding management's expectations due to stronger sales volume and Fit to Win benefits [4][14] - Shipments increased by more than 4$61 million in the first quarter, contributing significantly to better-than-expected results [4][10] Business Line Data and Key Metrics Changes - Segment operating profit improved significantly in The Americas, driven by strong demand and strategic initiatives, while results in Europe trended down due to lower net prices and temporary production downtime [4][15] - In The Americas, sales volume grew nearly 4%, with strong performance in beer and spirits, while Europe saw a slight increase in volume but faced competitive pricing pressures [6][15] Market Data and Key Metrics Changes - Shipments in The Americas were up more than 4%, with inventory normalization and structural demand improvement in Latin America [6][7] - In Europe, volumes increased nearly 4% driven by customer inventory rebuilding, but there were challenges due to excess capacity and temporary curtailments [7][15] Company Strategy and Development Direction - The company is reaffirming its full-year 2025 guidance, expecting adjusted earnings to improve between 50% to 85% from 2024 levels [5][17] - The Fit to Win program aims to reduce total enterprise costs and optimize the network to support future profitable growth, with a target of $250 million in savings for 2025 [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the year, noting that while there are anticipated headwinds, the company is well-positioned to manage elements within its control [5][23] - The impact of changing global trade policies is uncertain, but the company believes it can capitalize on domestic production advantages [21][22] Other Important Information - The company is addressing excess capacity in Europe through temporary curtailments and is consulting with local works councils regarding long-term restructuring actions [7][15] - The company has made significant progress in reducing inventory, which is down approximately$225 million from the same time last year [16] Q&A Session Summary Question: Can you talk about any pre-buy effects and volume impacts? - Management indicated that pre-buying had a limited impact on the stronger volume in the quarter, with stronger sales seen in January and February [30] Question: What is the outlook for volumes in April? - Volumes were down about 1% or 2% in April, but overall, the company maintains a stable volume outlook for the year [31][32] Question: Can you provide insights on volume progress by end market? - Strong volume growth was reported across most categories in The Americas, particularly in beer and spirits, while Europe saw mixed results with some softness in spirits [44][45] Question: What are the plans for French operations given the slowdown in wine? - The company is realigning its operations to focus on premium products, while continuing to invest in key markets like France [50][51] Question: How are tariffs on aluminum seen as an opportunity? - Management noted that if aluminum prices increase, it could help close the cost gap with glass, but they are focused on improving their cost base independently of tariffs [54][57] Question: What is the expected trend for net price and operating costs throughout the year? - Net price pressures are expected to moderate in the second half of the year, while curtailment costs are also anticipated to decrease [62][63] Question: How is the company managing energy costs? - The company has favorable long-term energy contracts and is well-positioned for the current year, with ongoing efforts to manage future energy costs [78][81]