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O-I Glass' April, May Shipment Down 18% on Coronavirus Crisis

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O-I Glass, Inc. (OI - Free Report) has provided business update for second-quarter 2020. The company’s second quarter-to-date performance has been hurt by production suspensions and reduced shipment levels due to lower customer demand and imposition of governmental health mandates in certain markets. Over the past few weeks, sales volumes have improved as markets have gradually started to reopen. However, the company’s global shipments declined 18% year over year during this period. Excluding Mexico and the Andean countries, daily shipment levels dropped in low double digits.

In order to reduce the absorption costs for production curtailments, O-I Glass is shifting curtailment from primarily line closures to indefinite furnace and plant downtime. The company will adjust the production capacity to serve its customers as markets recover. It anticipates volumes in the current year to be down 5-10% year on year.

Decreases in sales and production volumes due to the coronavirus crisis have been hurting the company’s financials. Despite these challenges, O-I Glass has delivered solid operating results across its segments in the quarter-to-date period, while continuing to generate positive free cash flow through cost-cutting actions and turnaround initiatives across its manufacturing footprint. The company’s solid liquidity position and improved refinancing activities provide the financial flexibility to sail through the current crisis. Also, the company has no bond maturities until 2023. It remains focused on improving factory performance, business-portfolio optimization and revolutionizing the glass segment.

O-I Glass has implemented few measures to mitigate financial impact of the coronavirus crisis, including aligning supply with current demand trends, reducing cost, lowering capital expenditures and managing working capital. It has executed the previously-announced program to temporarily reduce salaries for certain executive officers, directors as well as wage deferral for salaried employees. The company has suspended the payment of dividend and share repurchases in order to preserve cash and debt reduction.

O-I Glass’ initiatives to turn around its portfolio have aided its operating performance in the last few quarters. Its top priority is investments in businesses through joint ventures and incremental capacity, and bolt-on acquisitions in emerging geographies, while delivering a favorable return on invested capital.

Price Performance

Over the past year, shares of O-I Glass have depreciated 43.7% compared with the industry’s decline of 41.1%.



 

Zacks Rank & Key Picks

O-I Glass carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Industrial Products sector are Silgan Holdings Inc. (SLGN - Free Report) , Broadwind Energy, Inc. (BWEN - Free Report) and Axon Enterprise, Inc. . While Silgan sports a Zacks Rank #1 (Strong Buy), Broadwind Energy and Axon carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Silgan has a projected earnings growth rate of 11.3% for 2020. The company’s shares have gained 15% in the past three months.

Broadwind Energy has an expected earnings growth rate of 174% for the current year. The stock has appreciated 6% over the past three months.

Axon has an estimated earnings growth rate of 14.4% for the ongoing year. The company’s shares have rallied 21.3% in three months’ time.

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