Avery Dennison Corp. met its own reduced earnings forecast Tuesday and lowered its forecast for the year, citing slower-than-expected sales growth and higher-than-expected costs.
The Pasadena-based label maker reported net income of $57.7 million (57 cents per share) for the quarter ended April 2, compared with $52.6 million (52 cents per share) for the year ago period. Revenues grew about 8 percent to $1.3 billion, compared with $1.2 billion for the year ago period.
The company warned in mid-April that its first quarter earnings would be about 10 cents lower than previously forecast. In early-afternoon trading Avery shares were down 1.3 percent to $51.77 each.
Higher raw material costs, combined with lower unit volume growth and a pricey new-product launch conspired to hurt the company's results, according to the company's press release.
Avery Dennison launched new radio frequency identification tags, RFID, which contributed to its $34 million increase in marketing and administration expenses over the same quarter last year. The new RFIDs also led to an increase in inventory reserves, another expense.
The company also took a 4 cent-per-share charge in the first quarter for a plant closure and the related severance and transition costs.
Avery Dennison reduced its revenue-growth target to 5 percent to 6 percent for the year, down from its previous guidance of 6 percent to 10 percent growth.
It also adjusted its earnings per share guidance for 2005 to $2.85 to $3.15 per share, a lowering of about 30 cents. The company said it was expecting continued inflation in raw materials prices.
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