Avery Dennison Poised For Growth

Avery Dennison's Horizons growth programme has provided a full pipeline of new growth opportunities that include new products, applications and services, the company claimed at an annual New York meet

Avery Dennison's Horizons growth programme has provided a full pipeline of new growth opportunities that include new products, applications and services, the company claimed at an annual New York meeting of security analysts and investors it hosted.

The Horizon's programme launched more than 500 projects by the end of 2003, generating annualised incremental sales of approximately $50 million.

"The Horizons program at Avery Dennison has changed our mindset and our expectations for growth," said Philip M.

Neal, chairman and chief executive officer of Avery Dennison.

He also announced that the company raised the lower end of its previously announced earnings expectation from $0.60 to $0.63 per share for the first quarter of 2004.

Revised guidance for the first quarter is $0.63 to $0.67 per share.

The Company reiterated its guidance of $2.75 to $3.10 per share for the full year, before final restructuring charges associated with the Jackstadt integration, which is expected to total $30 million to $35 million before taxes.

"We are proving that our people thrive on tough challenges, their creativity flourishes when there are few boundaries, and change happens fast when they are committed to a tight deadline," said Neal.

Avery Dennison's strong and growing presence in the emerging markets of Asia, Latin America and Eastern Europe was cited as a key growth driver for the company.

"Sales of our products and services in these developing markets have consistently grown at more than 20% annually, and there is no slow down in sight," added Neal.

According to Neal, productivity improvement is a core competency at Avery Dennison, and the company expects to achieve substantial margin expansion in the near term as a result of several productivity improvement programmes.

Contributing to such improvement will be the completion of the Jackstadt integration, which is expected to occur by mid-2004 and the implementation of a productivity acceleration programme primarily in the office products business.

Neal described the anticipated adoption of radio frequency identification (RFID) technology by numerous industries in a wide variety of applications as Avery Dennison's single largest long-term growth opportunity.

Predicting that 10 to 15 years in the future, electronic labels containing RFID microprocessor chips will be as common as printed barcodes on labels today, Neal stated that Avery Dennison 'expects to be a leading supplier of electronic labels in the future, just as we are now a leading supplier of printed labels and label material.' "RFID fits right into the core of our business as both a materials supplier and a high-volume converter of a wide assortment of highly specialised label constructions," said Neal.

"We have the capabilities to provide virtually every component of the RFID tag, except for the microprocessor chip, making us uniquely positioned to capture a meaningful share of this potentially large, new market." Avery Dennison is currently producing tags and labels that feature RFID technology for several pilot programmes at leading technology and merchandising companies in the U.S.

and Europe.

The Company plans to double its investment in developing its RFID business in 2004, and it expects to start generating revenue on RFID products by the end of the year, with significant growth anticipated in 2005 and beyond as production capacity and demand increase.

Neal said that the company has positioned itself for solid, sustainable improvement in 2004 and beyond.

"After several years of relatively heavy acquisition and divestitures, we now have the right portfolio of businesses to drive long-term value creation.

We have the right assets in place globally to maintain our competitive advantage in our businesses, we have the proven tools in our Horizons and Six Sigma programmes to execute our growth and productivity improvement strategies and we have the right people to make it all happen," commented Neal.

Based in Pasadena, California (USA), the company had 2003 sales of $4.8 billion.

Avery Dennison develops, manufactures and markets a wide range of products for consumer and industrial markets, including Avery-brand office products and graphics imaging media, Fasson-brand self-adhesive materials, peel-and-stick postage stamps, reflective highway safety products, automated retail tag and labelling systems, and specialty tapes and polymers.

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