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Avery Dennison Provides Update on Growth Strategies and Operations

Published on 2006-03-03. Author : SpecialChem

LOS ANGELES -- Avery Dennison Corporation (NYSE:AVY) provided an update on its growth strategies and operations at a Company-hosted meeting of securities analysts and institutional investors. The Company highlighted growth opportunities, including rapid expansion in the emerging markets of Asia, Latin America and Eastern Europe.

"Emerging markets continue to play an important role in our future growth," said Dean A. Scarborough, president and chief executive officer of Avery Dennison. "We have more than doubled our share of sales in the emerging markets over the past five years, with revenue from these regions currently representing more than 20 percent of the Company's total sales. Opportunities for profitable growth in these markets are outstanding, and we have made significant investments to capture that anticipated growth."

Scarborough and Avery Dennison's senior management team presented a review of the Company's global operations, as well as its performance targets and investment strategies. The presentations, which were broadcast live over the Internet and are available for replay on the Company's Web site, included updates on Avery Dennison's pressure-sensitive materials business, office products business, retail information services business, and specialty materials and converting businesses.

Scarborough highlighted the progress to date for Avery Dennison's new RFID business, stating that "similar to the emerging markets today, RFID will one day represent an entirely new platform for growth." He announced that global consumer products manufacturer Kimberly-Clark recently selected Avery Dennison as its supplier for Gen 2 inlays, which are the industry's current standard for RFID labels. As previously announced, the Company is targeting approximately $10 million in revenue from RFID inlays this year, including sales related to Kimberly-Clark's implementation plans, as well as those of other key end-users and converters expected to be announced in the coming months.

Pointing out that the timing and pace of industry development are highly uncertain, Scarborough said that Avery Dennison "has targeted a market share goal of 30 percent by the end of 2006, which should eventually translate into a business contributing hundreds of millions of dollars of revenue annually." He also outlined the Company's competitive advantages in the RFID marketplace, including its proprietary high-speed manufacturing capability for inlays and its extensive network of existing relationships with label converters that will supply RFID tags to end-users.

A wide-ranging program for continued improvement of the Company's profitability was discussed, including a global initiative to streamline and simplify operations and support functions that will result in more cost efficient, customer-focused businesses.

"Our top priorities are growth and productivity improvement," said Scarborough. "Our business fundamentals remain strong, as we continue to enjoy market leading positions in our core businesses. We are executing against a balanced strategy for superior long-term value creation, encompassing top-line growth, margin improvement and capital efficiency, and we have a proven management team that continues to build a high-performance organization focused on maximizing long-term shareholder value."

Avery Dennison is a global leader in pressure-sensitive labeling materials, office products and retail tag, ticketing and branding systems. Based in Pasadena, Calif., Avery Dennison is a FORTUNE 500 company with 2005 sales of $5.5 billion. Avery Dennison employs more than 22,000 individuals in 48 countries worldwide who apply the Company's technologies to develop, manufacture and market a wide range of products for both consumer and industrial markets.

Products offered by Avery Dennison include Avery-brand office products and graphics imaging media, Fasson-brand self-adhesive materials, peel-and-stick postage stamps, reflective highway safety products, labels for a wide variety of automotive, industrial and durable goods applications, brand identification and supply chain management products for the retail and apparel industries, and specialty tapes and polymers.

Certain information presented in this news release may constitute "forward-looking" statements. These statements are subject to certain risks and uncertainties. Actual results and trends may differ materially from historical or expected results depending on a variety of factors, including but not limited to fluctuations in cost and availability of raw materials; ability of the Company to achieve and sustain targeted cost reductions; foreign exchange rates; worldwide and local economic conditions; selling prices; impact of legal proceedings, including the U.S. Department of Justice ("DOJ") criminal investigation, as well as the European Commission ("EC"), Canadian Department of Justice, and Australian Competition and Consumer Commission investigations, into industry competitive practices and any related proceedings or lawsuits pertaining to these investigations or to the subject matter thereof (including purported class actions seeking treble damages for alleged unlawful competitive practices, and purported class actions related to alleged disclosure violations pertaining to alleged unlawful competitive practices, which were filed after the announcement of the DOJ investigation, as well as a likely fine by the EC in respect of certain employee misconduct in Europe); impact of potential violations of the U.S. Foreign Corrupt Practices Act based on issues in China; impact of epidemiological events on the economy and the Company's customers and suppliers; successful integration of acquired companies, financial condition and inventory strategies of customers; development, introduction and acceptance of new products; fluctuations in demand affecting sales to customers; and other matters referred to in the Company's SEC filings.

The financial information referred to in this news release represents preliminary financial results, but the audit has not yet been completed. Under Section 404 of the Sarbanes-Oxley Act, integrated audit requirements will not be met until the Company has completed all of the steps necessary to file these financial statements with the SEC.

The Company believes that the most significant risk factors that could affect its ability to achieve its stated financial expectations in the near-term include (1) potential adverse developments in legal proceedings and/or investigations regarding competitive activities; (2) the degree to which higher raw material costs can be passed on to customers through selling price increases (and previously implemented selling price increases can be sustained), without a significant loss of volume; (3) the impact of economic conditions on underlying demand for the Company's products; and (4) ability of the Company to achieve and sustain targeted cost reductions.

Source: Avery Dennison


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