Foreign Sales Help Avery’s Profit Climb 7%

Label maker Avery Dennison Corp. said Tuesday that its fourth-quarter earnings rose 7%, aided by cost cutting and increased foreign sales, pushing its stock to a 52-week high.

The Pasadena-based company, which commands about half of the labeling market, posted a profit of $59.3 million, or 59 cents a share, compared with $55.5 million, or 56 cents, a year earlier.

Avery Dennison’s fourth-quarter sales rose 13%, to $1.23 billion from $1.09 billion, on the strength of foreign currency exchange rates and new deals in China and Latin America.

Sales of labels, adhesives and other office products in the U.S. remained relatively flat from the fourth quarter in 2002, but stemmed the declines of earlier in 2003, the company said.

Those declines had prompted Avery Dennison to lower its profit outlook for the fourth quarter in October.

Analysts were guardedly optimistic about the results, saying they could signal a recovery for this year. “There are some signs of stability across most of their markets,” said Ghansham Panjabi, an analyst with Lehman Bros. who has a positive rating on the stock.

Neither Panjabi nor Lehman Bros. owns Avery Dennison’s stock, and Lehman said it had no business relationship with the company.

Tuesday’s news boosted Avery Dennison shares to a 52-week high of $62.40 before closing at $61.19, up $4.15 for the day in New York Stock Exchange trading.

Results in the latest quarter included a charge of 25 cents a share to integrate an acquisition, and a gain of 19 cents from the sale of a package-label operation in Europe.

For the full year, Avery Dennison’s profit rose 4% to $267.9 million, or $2.68 a share, from $257.2 million, or $2.59, in 2002. Revenue climbed 15% to $4.76 billion, up from $4.16 billion in 2002.

“While the past year has been a challenge, we have invested heavily in new initiatives and infrastructure to drive earnings growth and shareholder value,” said Daniel O’Bryant, Avery’s chief financial officer.

Avery expects first-quarter earnings of 60 to 67 cents a share and a 2004 profit of $2.75 to $3.10 a share, greater upside than many analysts had expected.

But Panjabi said Avery’s fate was tied to the overall economy. “The economy in the U.S. has to improve, the economy in Europe has to improve and Asia has to remain relatively stable,” he said. “It’s going to very hard to achieve the target ranges” without that, he said.

Avery officials would not comment Tuesday on the status of a Justice Department antitrust probe into the labeling market. In August, Avery was subpoenaed as part of the probe.