Avery Dennison ((AVY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In the recent earnings call, Avery Dennison conveyed a positive outlook, showcasing strong financial performance in 2024 and an optimistic guidance for 2025. The company highlighted key achievements, including growth in Intelligent Labels and new partnerships with CVS Health and Kroger. However, challenges such as softer than expected Vestcom sales and a decline in the logistics segment for Intelligent Labels were also discussed.
Strong Financial Performance in 2024
The year 2024 has been a strong one for Avery Dennison, with sales growing by 5%, an adjusted EBITDA margin expansion of 130 basis points, and a 19% growth in adjusted EPS at the high end of their original guidance. This robust financial performance underscores the company’s ability to execute its strategic initiatives effectively.
Materials Group Growth
Avery Dennison’s Materials Group delivered impressive top-line growth in 2024, driven by significant volume increases and strong margin expansion. High-value categories and emerging markets were pivotal in achieving these results, highlighting the company’s strategic focus on these areas.
Progress in Intelligent Labels
The Intelligent Labels segment showed remarkable progress, growing organically by 9% and reaching approximately $900 million in revenue in 2024. This growth is a testament to the increasing demand and adoption of Avery Dennison’s innovative labeling solutions.
New Partnerships and Innovations
Avery Dennison announced exciting new partnerships, including a collaboration with CVS Health for Vestcom and a strategic alliance with Kroger for Intelligent Labels. These partnerships are expected to drive further innovation and growth in their respective segments.
Positive Outlook for 2025
Looking ahead, Avery Dennison’s guidance for 2025 is optimistic, expecting GDP-plus growth and expanding margins. The company projects adjusted EPS to be in the range of $9.80 to $10.20, reflecting a 7% to 12% increase, excluding currency translation impacts.
Vestcom Sales Below Expectations
Despite the overall positive performance, Vestcom sales were softer than anticipated, primarily due to lower volumes in the drugstore channel, affected by store closures. This area remains a challenge that the company will need to address moving forward.
Logistics Segment Decline
The logistics segment of Intelligent Labels experienced a decline in sales in 2024, attributed to the absence of a major RFID program rollout like the one in 2023, which had previously boosted sales.
Raw Material Pricing Challenges
Avery Dennison anticipates some challenges with raw material pricing, expecting slight deflation in Q4 2024 and Q1 2025, which could impact their operations and financial performance.
Guidance for 2025
Avery Dennison’s guidance for 2025 remains robust, with an adjusted EPS growth forecast of 7% to 12% and an expected range of $9.80 to $10.20. The company predicts 3% to 4% organic sales growth, driven by mid-single-digit volume growth and significant contributions from high-value categories. Intelligent Labels are forecasted to grow 10% to 15%, and the Materials Group is expected to achieve mid-single-digit volume growth.
In summary, Avery Dennison’s earnings call reflected a generally positive sentiment, with strong performance highlights and an optimistic outlook for 2025. While the company faces certain challenges, such as Vestcom’s softer sales and logistics segment decline, their strategic focus on high-value categories and new partnerships positions them well for continued growth and success.
