Chief Operating Officer at Avery Dennison
Thanks, Mitch, and hello, everyone. As Mitch said, we delivered impressive results in 2022 in the face of an extremely challenging environment. I'll now provide more color on our segment performance. Materials Group delivered 11% organic growth for the year, driven by higher pricing and a low-single digit volume decline excluding the impact of exiting Russia. Operating profit for the segment was strong, up mid single-digits ex-currency as unprecedented levels of inflation were met with significant pricing actions to continue delivering strong returns in this already high EVA business. Over the long-term, label materials volumes continue to grow at GDP-plus, up 3% annually in 2022 compared to 2019. In the fourth-quarter, Materials Group sales were up 2% ex-currency and on an organic basis, driven by a mid-teens impact from higher prices, largely offset by a low double-digit volume decline.
Following a period of material constraints earlier in the year, downstream inventories that began the year elevated were built-up even further midyear. And with supply-chain disruptions eased and inflation abated, customers rapidly de-stocked as they began to optimize inventory levels in the fourth-quarter. On an organic basis for the quarter, label materials were up low-single digits. Graphics and reflective sales were up low-single digits and performance tapes and medical sales were up low double-digits. Looking at label material's organic volume growth in the quarter by region, combined North-America and Western Europe were down mid-teens. Overall emerging markets were down mid single-digits with China volumes down low-single digits. And the exit of Russia lowered total label materials growth by roughly three points.
Given the soft environment over the past few months and the expectation for moderating economic growth, we have been activating our cost-saving initiatives both temporary and structural. We are focused on optimizing our cost structure and protecting the bottom-line in this lower-volume period, while continuing to manage strong pricing discipline. Given all these factors, we expect Q1 to look similar to Q4, anticipating roughly one to two weeks of inventory to be further reduced across the industry, with de-stocking concluding in the earlier part of the year. Following the inventory correction, given the durability by diverse and growing end-markets, along with our market-leading position, we expect to rebound to GDP-plus growth from Q2 onwards.
Stepping back, the combination of LGM and IHM not only enabled us to fully leverage the capabilities of the whole business, but strengthens our ability to win in the broader functional materials market, while also continuing to deliver EVA growth.
Turning to the Solutions Group, organic growth sales were up 5% for the year, driven by strong growth in high-value solutions and posted record margins despite the impact of retailer destocking. In the fourth-quarter, solutions group sales were down 7% ex-currency and 8% on an organic basis. The base business was down high-teens organically, partially offset by mid single-digit organic growth in the high-value categories. Apparel inventory reductions were broad-based across all channels in the fourth-quarter and destocking continued in January.
In this segment, we expect destocking to continue through Q1 and into Q2 as retailers factor high inventories, muted holiday performance, and lower sentiment into the near-term sourcing plans. Similar to the Materials segment, we are activating cost-saving initiatives both temporary and structural. We expect our apparel business to return to historic GDP growth in the second-half of the year and for the Solutions Segment to additionally benefit from the significant growth increasing through the year in our Intelligent labels platform.
Turning to Intelligent labels. Enterprise-wide sales were up mid-teens on an organic basis in 2022. Momentum in this roughly $800 million platform continues to accelerate. This business has more than tripled in size over the last five years, averaging 20% annual growth on an organic basis. The strong growth over this time horizon has primarily been driven by apparel, as we continue to drive further adoption of the technology, extend use cases, and expand programs with major customers in this key end-market. And while we continue to expect apparel to be the largest volume in the coming years, we see even greater opportunity over the long-run in other key untapped markets.
In logistics, which is expanding from targeted applications such as special package handling to broad-base use cases such as improving miss loads and routing accuracy. In food, where we are seeing promising pilots in QSR and grocery, in use cases covering freshness and labor efficiency and in general retail, where the technology is being expanded beyond apparel. The benefits of our Intelligent Label technology and solutions are clear. The increased supply-chain and inventory visibility, lower-cost and improve speed of operations, reduce waste and ultimately enhance the experience of end consumers.
As the leader in ultra-high frequency RFID, we are extremely well-positioned to not only capture these new opportunities, but lead at the intersection of the physical and digital. To that end, we are continuing to invest in developing new applications and markets, adding new technologies, both physical and digital, increasing our manufacturing capacity, including investing more than $100 million in a new facility in Mexico for growth in the back-half of 2024 and beyond, and expanding our team, the best most experienced in this space. Our strategies here continued to pay-off. We remain confident, this will be a one billion-dollar platform in 2023 and are targeting more than 20% growth in the coming years.
Lastly, we continue to deploy capital in other high-value solutions, signing an agreement in January to acquire Thermopatch patch, a business specializing in external embellishments with roughly $40 million in annual revenue. In summary, we delivered impressive results in 2022 in the face of an extremely challenging environment.
Inventory destocking is impacting our results near-term and we are making adjustments accordingly. I remain extremely confident in the underlying fundamentals and prospects of our business over the long-run.
And with that, I'll hand the call over to Greg.