O-I Glass reported strong first quarter results for 2023 as higher average selling prices boosted sales by approximately $100 million.
O-I reported its financial results for the first quarter which ended March 31, 2023.
Andres Lopez, O-I Glass CEO, said “We are pleased to report very strong first quarter performance, which significantly exceeded our expectations heading into the period. Higher earnings reflected strong net price realization, solid operating performance and benefits from our on-going margin expansion initiatives.
“As expected, sales volume was down from the same period in the prior year given a challenging prior year comparison among other factors. Despite elevated macroeconomic pressure, we are increasingly optimistic about our 2023 performance and have raised our full year guidance.”
Net sales were $1.8 billion in the first quarter of 2023, up compared to $1.7 billion in the prior year period primarily due to higher selling prices.
Sales volume (in tons) was down 8%, which was partially offset by favourable change in mix.
Approximately 3 to 4% of the volume decline was attributed to a challenging prior year comparison (up 6.4%) amid record low inventories and disruption from temporary external events impacted volumes around 2%.
Overall, the company estimates underlying market demand was down approximately 2 to 3%, primarily due to inventory destocking across the supply chain and softer consumer demand in a few markets given macroeconomic uncertainty.
Earnings before income taxes were $270 million in the first quarter of 2023, up $100 million compared to the prior year quarter. Likewise, segment operating profit was $398 million in the first quarter of 2023 compared to $231 million in the prior year period.
Retained corporate and other costs were $60 million, up compared to $50 million in the first quarter of 2022, primarily due to higher management incentives and cost inflation.
The company continues to expect strong earnings in the first half of the year while the outlook is intentionally conservative on the second half given increasing risk of recession.
O-I’s cash flow guidance has also increased to at least $475 million of adjusted free cash flow and $175 million of free cash flow. The company expects to refine its earnings and cash flow guidance over the course of the year as greater clarity is gained on sales volume and working capital trends.
The earnings and cash flow guidance ranges may not fully reflect uncertainty in macroeconomic conditions, currency rates, and further pandemic effects such as supply chain and labour challenges, among other factors.