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Published: 1/29/2004

O-I shares fall 5% on day after bad earnings news

BY MARY-BETH McLAUGHLIN
BLADE BUSINESS WRITER

Shares of Owens-Illinois Inc. fell more than 5 percent in heavy trading yesterday, a day after the glass and plastic container giant reported a loss of nearly $1 billion last year because of accounting charges related to asbestos-injury liability and devaluation of its plastic packaging operations.

Company executives, in a conference call with analysts yesterday, did not sound any alarms about the latest $450 million charge for asbestos liability or other parts of its financial performance for 2003.

Executives expect the problem will be resolved within seven years.

O-I is among the major U.S. corporations nationally that hope for reforms in U.S. laws that would cap asbestos liability or set up a national program from which to pay claimants.

"The big issue is whether we can get the federal legislation. There's still a shot at that in early spring," said Thomas Young, a co-chief executive of the Toledo Fortune 500 firm.

O-I, which insists it will not file bankruptcy because of mounting asbestos claims as did cross-town Owens Corning, said it faced 2 percent more asbestos claims last year than the year before - a total now of 29,000. O-I executives attributed the jump in cases to attorneys hoping to get lawsuits filed before any reform legislation is passed.

The local firm last made products containing asbestos in 1958.

The company's stock dropped 65 cents to close at $11.25 a share yesterday on the New York Stock Exchange. More than 1 million shares traded hands, three times the average daily volume.

The largest manufacturer of glass containers in North America, O-I reported a loss of $1.1 billion, or $7.33 a share, in the fourth quarter compared with a profit of $50.3 million, or 30 cents a share, a year

earlier. Without the charges, the company earned 4 cents a share, well below the 17 cents-a-share expectation of analysts surveyed by Thomson First Call.

The financial report caused Standard & Poor's to advise investors to sell O-I shares because of "uncertain" fundamentals.

For the year, the Toledo company said it lost $991 million in 2003, compared with a loss of $460 million in 2002. It had revenues of $6.2 billion last year, up from $5.8 billion the year before.

Internet message boards about O-I posted expressions of mixed feelings about the news. One poster declared "This will be a bad day" and another asked: "Is everyone blind?? Are the asbestos claims rising at an alarming rate or did I miss something??"

Another poster took comfort in the small decline in the company's share price. "You have a billion [dollar] loss when they expect a profit .<0x2009>.<0x2009>. you miss the numbers huge .<0x2009>.<0x2009>. and your stock does not get crushed .<0x2009>.<0x2009>. That is a bullish signal - you have heard what is public .<0x2009>.<0x2009>. when the microphones are off my guess is that OI is telling big money they are poised great for the future."

Mr. Young and co-CEO Terry L. Wilkison. told analysts that the review is continuing of O-I's blow-mold plastics operations in North America, South America, and Europe and they hope to have a decision on how to return it to profitability - including whether to sell all or part of it - by summer.

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