OI Glass shares plunge on revenue miss, weak Investing.com guidance

PERRYSBURG, Ohio – OI Glass, Inc. (NYSE: OI Glass) reported lower first-quarter revenue and issued a weaker full-year profit forecast, sending its shares down 5.89% in after-hours trading. The glass container maker reported earnings of $0.45 per share, beating analysts' forecasts of $0.06, but revenue fell short of expectations at $1.59 billion, compared with estimates of $1.69 billion.

The company's first-quarter revenue fell from $1.8 billion a year earlier, reflecting a 12.5% ​​decline in sales. Chief Executive Andres Lopez said the downturn in the market, which affected shipment levels due to weak consumer spending and inventory destocking, was the main factor in the decline. Despite these challenges, Lopez is confident about long-term demand for glass packaging and potential earnings growth as the market recovers. OI Glass is also looking forward to the launch of its innovative MAGMA greenfield factory in summer 2024, which is expected to provide significant competitive advantages.

For full-year 2024, OI Glass revised its guidance and now expects adjusted earnings per share in the range of $1.50 to $2.00, below the average analyst estimate of $2.38. The company also expects sales growth to be flat to low single digits, a revision from its previous forecast of mid to low single digit growth. The updated outlook reflects a slower recovery in consumer spending, additional costs of temporary production restrictions, unfavorable foreign currency translation, higher interest payments and higher tax rates.

Due to changes in the regional profit structure, the company's effective tax rate in the first quarter was approximately 35%, up from 22% in the first quarter last year. Net interest expense also increased to $78 million from $68 million in the previous year, affected by rising interest rates.

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Despite current market challenges, OI Glass remains optimistic about a positive long-term trajectory for glass packaging demand, driven by trends such as premiumisation, sustainability and health and wellness. The company's management is focused on balancing supply and demand and expects to mitigate some of the impact of lower demand with at least $175 million in profit expansion plans.

Investors reacted negatively to the lower-than-expected revenue and profit guidance cut, which was reflected in the stock's after-hours decline. The market reaction highlights the importance of meeting revenue expectations and providing strong future guidance to maintain investor confidence.

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