Net sales rose 5.2 per cent year on year (YoY) to $2.33 billion in the third quarter (Q3) ended September 30, 2026, while sales excluding currency effects increased 4.9 per cent and organic sales grew 3.7 per cent.
Avery Dennison reported third-quarter 2026 net sales of $2.33 billion, up 5.2 per cent year on year, as organic sales rose 3.7 per cent.
Net income advanced 2 per cent to $169.7 million and adjusted diluted earnings per share rose 2.1 per cent to $2.42.
Materials Group growth offset softer reported Solutions Group sales, while the US company expects FY26 adjusted EPS of $10.10-$10.24.
Net income increased 2 per cent to $169.7 million, or $2.24 per diluted share, from $166.3 million, or $2.13 per diluted share, a year earlier. Adjusted net income declined 0.8 per cent to $183.3 million, while adjusted diluted earnings per share (EPS) rose 2.1 per cent to $2.42. Gross profit increased to $654.8 million from $635 million, although gross margin narrowed to 28.1 per cent from 28.7 per cent.
“We delivered another quarter of strong results, highlighted by continued improvement in our underlying organic sales and earnings growth,” said Deon Stander, president and CEO, Avery Dennison Corporation.
“Our focus on innovation and service-led differentiation drove mid-single digit organic growth in both our high-value categories and base businesses. In the face of higher inflation and customer destocking impacts, our teams demonstrated strong operational agility, delivering robust productivity and generating impressive free cash flow,” added Stander.
Materials Group offsets reported sales decline in Solutions
Materials Group sales increased 8.5 per cent to $1.64 billion, with sales excluding currency effects up 6.7 per cent and organic growth at 4.9 per cent. Both high-value and base categories recorded mid-single-digit growth, supported by low-single-digit volume and mix growth and mid-single-digit pricing benefits.
Solutions Group sales declined 1.8 per cent to $687 million on a reported basis, but rose 0.8 per cent excluding currency effects and on an organic basis. High-value categories were comparable with the prior-year quarter, base categories rose by low single digits and overall apparel categories increased by mid-single digits, Avery Dennison said in its earnings release.
Margins mixed as productivity offsets cost pressures
Company-wide adjusted operating income rose 0.4 per cent to $282.1 million, while adjusted operating margin fell to 12.1 per cent from 12.7 per cent. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased 0.7 per cent to $367.7 million, with its margin declining to 15.8 per cent from 16.5 per cent.
Materials Group adjusted operating income edged up to $231.1 million from $230.1 million, though adjusted operating margin declined by 110 basis points to 14.1 per cent. Its adjusted EBITDA margin also fell by 110 basis points to 16.4 per cent as productivity was more than offset by adverse volume and mix, alongside higher employee-related costs.
Solutions Group adjusted operating income rose to $74.4 million from $69.7 million, lifting adjusted operating margin by 80 basis points to 10.8 per cent. Adjusted EBITDA margin similarly improved by 80 basis points to 17.8 per cent, despite higher employee-related costs.
Adjusted free cash flow was $246 million in Q3, compared with $268.7 million a year earlier. The company generated $298.8 million in operating cash flow during the quarter, while capital expenditure totalled $47.6 million. Through the first three quarters, restructuring actions produced about $54 million in pre-tax savings, against approximately $43 million in pre-tax restructuring charges.
FY26 earnings outlook
Avery Dennison expects reported EPS of $9.45-$9.59 for full-year 2026. Excluding an estimated $0.65 per-share impact from restructuring charges and other items, it expects adjusted EPS of $10.10-$10.24. Net debt-to-adjusted EBITDA stood at 2.2 times at the end of Q3.
Fibre2Fashion News Desk (SG)
