O-I Glass' (OI) Portfolio Optimization Plan Nears Completion
O-I Glass, Inc. OI recently announced that its subsidiary completed a sale and leaseback transaction for a plant located in Brampton, Ontario, for CAD $244 million ($191 million). With this deal, the company has already generated $1.3 billion of proceeds under its ongoing Portfolio Optimization program to exit non-core operations and invest in its core business. OI is set to achieve its targeted $1.5 billion by the end of this year, way ahead of its original target of 2024.
In sync with the plan, previously in March, O-I Glass had completed the sale of Cristar TableTop S.A.S. (“Cristar”) to Vidros Colombia S.A.S, an affiliate of Nadir Figueiredo S.A for gross proceeds of $96 million. Cristar owns dedicated tableware manufacturing plant in Buga, Colombia. It exports tableware across 40 countries globally. OI had earlier sold its Le Parfait brand and business in France.
Proceeds from the portfolio optimization program will be utilized to fund attractive expansion projects and improve financial strength. O-I Glass has plans in place to invest up to $680 million in new capacity through 2024 to achieve volume growth and meet demand. These investments are anticipated to generate an average internal rate of return of 20%. The plan includes an addition of up to 11 MAGMA lines.
O-I Glass recently reported first-quarter 2022 adjusted earnings of 56 cents, which surpassed the Zacks Consensus Estimate of 41 cents. The bottom line was higher than the company’s guidance of 38 cents to 43 cents. On a year-over-year basis, earnings surged 60%, driven by gains from higher sales volumes and production, favorable pricing, and benefits from OI’s ongoing margin expansion initiatives.
The company stated that it is on track to achieve its target of $50 million of benefits this year from its margin expansion initiatives. For 2022, O-I Glass expects strong demand for healthy, sustainable glass containers to continue, thereby supporting its earnings. Backed by this momentum, the company now projects adjusted earnings per share between $1.85 and $2.10 for the current year, up from the previous $1.85-$2.00. OI had reported earnings per share of $1.83 in 2021.
Price Performance
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Shares of the company have fallen 18.3% in a year’s time compared with the industry’s decline of 37.8%.
Zacks Rank & Other Stocks to Consider
O-I Glass currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Company GPK, Myers Industries MYE and Packaging Corporation of America PKG. While GPK and MYE flaunt a Zacks Rank #1, PKG carries a Zacks Rank #2. Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.
Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 14.8% in a year.
Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have gained 13% in the past year.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 4% in the past year.
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