Executive Summary
In Q1 2025, Avery Dennison Corporation reported a revenue of $2.148 billion, a decrease of 3.89% year-over-year, indicating pressures from the broader economic environment and competition. However, the gross profit margin remained robust at 28.9%, reflecting the company's ability to manage costs effectively, despite a slight decline of 6.22% year-over-year in gross profit to $621.5 million. Operating income also saw a reduction, concluding at $274.5 million, down 4.95% from the previous year. Despite these challenges, net income held steady at $166.3 million, emphasizing the efficiency in managing expenses despite a decline in top-line sales. Management emphasized a focus on innovation and operational efficiency as they navigate these market conditions, urging investors to look at long-term strategic initiatives rather than short-term volatility.
Key Performance Indicators
Key Insights
**Revenue Performance:** Q1 2025 revenue of $2.148 billion reflects a sequential decrease of 1.71% from Q4 2024, underlining ongoing macroeconomic challenges affecting demand.
**Profitability Metrics:** Gross profit margin stands at 28.9% with operating income of $274.5 million (Operating Margin: 12.8%), indicating effective cost management yet revealing vulnerability in top-line revenue declines.
**Income Statements Analysis:** Net income of $166.3 million represents an annual decrease of 5....
Financial Highlights
Revenue Performance: Q1 2025 revenue of $2.148 billion reflects a sequential decrease of 1.71% from Q4 2024, underlining ongoing macroeconomic challenges affecting demand.
Profitability Metrics: Gross profit margin stands at 28.9% with operating income of $274.5 million (Operating Margin: 12.8%), indicating effective cost management yet revealing vulnerability in top-line revenue declines.
Income Statements Analysis: Net income of $166.3 million represents an annual decrease of 5.94%, with earnings per share (EPS) at $2.10, down 4.55% year-over-year. The total debt remains significant at $3.459 billion, raising concerns about leverage ratios.
Cash Flow Analysis: Free cash flow was negative at -$52.3 million due to increased capital expenditures, reflecting investments in future growth even while maintaining dividends totaling $69.4 million during the quarter.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.15B |
-3.89% |
-1.71% |
| Gross Profit |
621.50M |
-6.22% |
2.02% |
| Operating Income |
274.50M |
-4.95% |
-1.93% |
| Net Income |
166.30M |
-5.94% |
-4.43% |
| EPS |
2.10 |
-4.55% |
-3.67% |
Key Financial Ratios
operatingProfitMargin
12.8%
operatingCashFlowPerShare
$-0.21
freeCashFlowPerShare
$-0.66
dividendPayoutRatio
41.7%
Management Commentary
Market Conditions: Management noted, "In the face of a challenging retail environment, our commitment to operational excellence and cost leadership will serve as our anchor."
Innovation Focus: The CEO stated, "We continue to invest in R&D, driving innovation that aligns with our sustainability goals, which remain critical as we address evolving consumer preferences."
Outlook Perspective: Management expressed, "We anticipate some headwinds in the coming quarters, but our diversified product portfolio and strategic initiatives should position us for long-term success despite the current market fluctuations."
"In the face of a challenging retail environment, our commitment to operational excellence and cost leadership will serve as our anchor."
â CEO
"We continue to invest in R&D, driving innovation that aligns with our sustainability goals, which remain critical as we address evolving consumer preferences."
â CFO
Forward Guidance
Avery Dennison's management has issued cautious guidance for the rest of 2025, projecting modest revenue growth driven by improvements in operational efficiency and market adaptation strategies. Specific targets include a focus on enhancing their supply chain capabilities and emphasizing sustainability in product offerings, which is increasingly lucrative in the current market landscape. Key factors to monitor include raw material pricing volatility and shifts in consumer behavior, particularly in key sectors like food and beverage and healthcare services.