Avery Dennison Corp
For the period ended Dec 30, 2023. Filed Feb 21, 2024.
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FY2023 · Filed Feb 21, 2024
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Results of Operations by Reportable Segment
Operating income refers to income before taxes, interest and other non-operating expense (income), net.
| (In millions) | 2023 | 2022 | 2021 |
|---|---|---|---|
| Net sales including intersegment sales | $5,968.4 | $6,632.2 | $6,312.3 |
| Less intersegment sales | (157.1) | (137.1) | (105.8) |
| Net sales | $5,811.3 | $6,495.1 | $6,206.5 |
| Operating income(1) | 700.9 | 859.3 | 883.3 |
| (1) Included charges associated with restructuring actions and related costs in all years, Argentine peso remeasurement loss and loss on sale of assets in 2023, outcomes of legal proceedings in 2023 and 2021, gain on venture investment in 2022, and gain on sale of product line, gain on sale of assets, and transaction and related costs in 2021 | $88.3 | $(13.4) | $(25.7) |
The factors impacting reported net sales change are shown in the table below.
| 2023 | 2022 | |
|---|---|---|
| Reported net sales change | (11)% | 5% |
| Foreign currency translation | — | 6 |
| Sales change ex. currency(1) | (10) | 11 |
| Organic sales change(1) | (10)% | 11% |
(1)Totals may not sum due to rounding.
In 2023, net sales decreased on an organic basis compared to the same period in the prior year due to lower volume driven primarily by inventory destocking, partially offset by the impact of pricing actions. On an organic basis, net sales decreased by a low double-digit rate in North America, a mid-to-high teens rate in Western Europe and a mid-to-high single digit rate in emerging markets.
In 2022, net sales increased on an organic basis compared to the same period in the prior year due to pricing actions, partially offset by lower volume/mix. On an organic basis, net sales increased a low double-digit rate in North America, a high-teens rate in Western Europe and by a mid-to-high single digit rate in emerging markets.
Operating Income
Operating income decreased in 2023 compared to the same period in 2022 primarily due to lower volume, higher restructuring charges and the Argentine peso remeasurement loss, partially offset by benefits from productivity initiatives, including temporary cost-saving actions, material re-engineering and savings from restructuring actions, net of transition costs, and the net impact of pricing and raw material input costs.
Operating income decreased in 2022 compared to the same period in 2021 primarily due to unfavorable volume/mix, the impact of unfavorable foreign currency translation, higher employee-related costs and the impact of a Brazil indirect tax credit in the prior year, partially offset by the net impact of higher selling prices, higher raw material costs and higher freight costs.
| (In millions) | 2023 | 2022 | 2021 |
|---|---|---|---|
| Net sales including intersegment sales | $2,588.5 | $2,581.6 | $2,239.1 |
| Less intersegment sales | (35.5) | (37.4) | (37.3) |
| Net sales | $2,553.0 | $2,544.2 | $2,201.8 |
| Operating income(1) | 165.7 | 302.3 | 257.2 |
| (1) Included charges associated with restructuring actions, outcomes of legal proceedings, and transaction and related costs in all years, loss on venture investments in 2023, gain on sales of assets in 2022, loss on sale of asset and gain on venture investments in 2021. | $86.3 | $7.8 | $36.6 |
The factors impacting reported net sales change are shown in the table below.
| 2023 | 2022 | |
|---|---|---|
| Reported net sales change | —% | 16% |
| Reclassification of sales between segments | — | (1) |
| Foreign currency translation | 2 | 4 |
| Sales change ex. currency(1) | 2 | 19 |
| Acquisitions | (3) | (14) |
| Organic sales change(1) | (1)% | 5% |
(1) Totals may not sum due to rounding.
In 2023, on an organic basis, net sales increased by a high single-digit rate in high-value categories and decreased by a low-double digit rate in the base business compared to the prior year. Company-wide, on an organic basis, sales of Intelligent Label solutions increased by a low-double digit rate compared to the prior year.
In 2022, on an organic basis, net sales increased by a mid-teens rate in high-value categories and decreased by a low-single digit rate in the base business compared to the prior year. Company-wide, on an organic basis, sales of Intelligent Label solutions increased by a mid-teens rate compared to the prior year.
Operating Income
Operating income decreased in 2023 compared to 2022 primarily due to an increased accrual for the Adasa legal matter (described in Note 8, "Contingencies" to the Consolidated Financial Statements), higher employee-related costs, lower volume, growth investments and the impact of unfavorable foreign currency translation, partially offset by benefits from productivity initiatives, including temporary cost-saving actions and savings from restructuring actions, net of transition costs.
Operating income increased in 2022 compared to 2021 primarily due to the combined benefit of higher organic volume and acquisitions, the impact of legal proceedings in the prior year, and lower transaction and related costs, partially offset by higher amortization of other intangibles resulting from business acquisitions, growth investments and higher employee-related costs.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.