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By the numbers: Q4 and full-year 2023
2023 net sales: $7.1B
Up 4% year over year, thanks to higher selling prices
2023 earnings before income taxes: $67M
Down from $805M in 2022
- Q4 results: O-I Glass ended a year of lower consumer demand and customer inventory destocking. Net sales were $1.6 billion in the fourth quarter, down from $1.7 billion in the prior year period. Shipments were down 16% in the fourth quarter, versus down 12% in 2023 as a whole.
- Destocking: Destocking activity is “pretty much done” in beer and food, with spirits and wine expected to linger through the middle of this year, CEO Andres Lopez said during an earnings call Wednesday. Glass destocking started later than other categories, Lopez said, and those industries have seen a rebound, which gives O-I confidence. “I'm encouraged by early signs of recovery and believe the worst is behind us,” he said.
- Demand trends: Consumption trends have been more “favorable” in recent quarters, with beer and non-alcoholic beer glass demand improving, the company reported. Trade-downs to other substrates have been limited, Lopez said. Demand for new product development has also been growing, he said. January reflected sequential volumes improvement.
- Pricing: O-I has already completed just above 80% of its annual price negotiations, Lopez said. In 2024 guidance, the company wrote: “While net price will likely decline in 2024, the company expects to retain 75 percent of the favorable net price realized over the prior two years.”
- New capacity: O-I is on track to open a production site with new technology in Bowling Green, Kentucky, in mid-2024 to serve region’s spirits market. O-I’s 2024 objectives also include advancing capacity expansion projects in Brazil, Peru and Scotland, but timing depends on market recovery.
- Outlook: January trends reflected improvement, with volumes down 10% versus Q4’s -16%. O-I expects demand will rebound by mid-2024, strengthening in the second half of the year. That will vary by geography and category, with beer and food expected to improve sooner and wine and spirits later. O-I foresees 2024 lagging 2023’s high mark for adjusted earnings, citing softer macroeconomic factors in the first half of 2024. As for 2024 guidance, O-I wrote it “will benefit from strong operating leverage as sales and production volumes more fully recover to pre-pandemic levels over time.” O-I expects free cash flow for the year between $150 million to $200 million.
