O-I Glass Earnings: Outlook Cut on Weak End Market Demand Amid Persistent Inventory Destocking

Narrow-moat-rated O-I Glass started the year on shaky ground as the company reported lackluster earnings. Net sales fell 13% year over year as both segments reported double-digit declines, while segment operating margins tumbled almost 700 basis points to 14.8%. While we expected some margin contraction due to a pullback in O-I’s European business, O-I’s results came in below our expectations. While most packaging producers have experienced a slowdown in inventory destocking, this has not been the case for O-I, which is navigating significant destocking across much of its portfolio. As such, we've decreased our fair value estimate to $22 per share from $25 to reflect lower shipments during the year.