In order to focus on cost-effective products for healthcare facilities, Avery Dennison Corporation (AVY) has renamed and repositioned its medical solutions group as “Vancive Medical Technologies”. The innovative and cost effective medical solutions of the new group will be available to both service providers and patients.
The new brand, which replaces “Avery Dennison Medical Solutions”, will offer several innovative products including Metria, Intelishielda and BeneHold that enable patients as well as physicians to make smarter health decisions. Avery expects Vancive to continue to deliver medical products meeting people’s needs.
Avery is restructuring its facilities to reduce costs and deliver double-digit earnings growth and higher returns. The company targets to achieve more than $100 million in annualized savings by mid-2013.
Avery expects annualized savings from its restructuring actions to be nearly $20 million in 2012. It continues to examine further opportunities to reduce costs, including additional restructuring actions.
Avery’s adjusted earnings improved 77% year over year to 53 cents per share in third-quarter 2012, beating the Zacks Consensus Estimate of 45 cents. Total revenues dipped 0.8% to $1.488 billion but were ahead of the Zacks Consensus Estimate of $1.487 billion.
Avery has a good exposure to Europe, generating a third of its total revenues from the region. However, dearth of demand in Europe given the weak economic conditions may pressure its revenues moving ahead.
Moreover, rising raw material costs will put pressure on the margins. In addition, the restructuring activities being capital intensive will further pressure margins moving ahead.
Based in Pasadena, California, Avery produces pressure-sensitive materials, office products and a variety of tickets, tags, labels and other converted products. It has over 200 manufacturing operations and distribution facilities in more than 60 countries. The company’s products are sold under the Avery, Avery Dennison, Avery Graphics and Fasson brands.
Avery faces competition from Bemis Company, Inc. (BMS) and 3M Co. (MMM). The company retains a short-term Zacks #2 Rank (Buy). We have a long-term Underperform recommendation on the stock.
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