Avery Dennison Corp (AVY) has made strong progress toward achieving its 2015 financial goals, including a focus on improving its return on total capital, according to Dean A. Scarborough, Chairman and Chief Executive Officer. He was speaking at Baird’s 2014 Industrial Conference, held at the Four Seasons Hotel in Chicago.
The company reported sales from continuing operations of $6.1 billion in 2013, breaking down as logistics and shipping, 17% of sales; non-durable consumer goods, 39%; retail apparel, 22%; medical/health care, 5%; and industrial/durable, 17%. Emerging markets are 30% of Avery Dennison’s business, while the U.S. represents 37% of its total business.
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“We feel real good about achieving our 2015 goals,” said Scarborough, adding that the company has momentum toward achieving projections out to 2018. Scarborough said Avery Dennison has improved its margins and has “great free cash flow.”
“We are returning a lot of cash to shareholders. We like this portfolio, and have good exposure to emerging markets. We’ve got a lot of capacity on the balance sheet,” Scarborough said.
The company is projecting 4% to 5% organic sales growth (CAGR) through 2018, numbers that reflect five-year compound annual growth rates with 2013 as the base period. Its 2018 operating margin projections are at 9% to 10%. Its 2018 return on total capital (ROTC) is projected at 16%.
The targets reflect improved growth trajectory and step-function increase in historical operating margin for its two major businesses, Pressure-Sensitive Materials and Retail Branding & Information Solutions, Scarborough said.
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