O-I Glass Q1 Earnings Call Highlights

Key Points

• O-I Glass reported Q1 adjusted EPS of $0.05 (vs. $0.40 a year ago) and cut full-year adjusted EPS guidance to $1.00–$1.50, blaming elevated European price competition, one‑time cost disruptions and macro-driven energy inflation that could swing $75–$100 million.
• The company is about halfway to its cumulative Fit to Win savings target of $750 million through 2027, delivering roughly $50 million of gross (≈$35 million net) benefits in Q1 and targeting at least $275 million of benefits in 2026 as restructuring and plant closures continue.
• Shipments fell about 8% year‑over‑year but improved to a ~2% decline in March; management expects full‑year volumes to be about flat with Q2 stability and low‑ to mid‑single‑digit growth in H2, supported by 15 confirmed volume wins (~1.5% of sales) beginning in H2 2026.

O-I Glass NYSE: OI reported a challenging start to fiscal 2026, with first-quarter results pressured by sluggish early-quarter demand, elevated competitive pressure in Europe, and several one-time external disruptions that increased costs. Management said volume trends improved as the quarter progressed, but the company lowered its full-year adjusted earnings outlook to reflect a tougher European market and macro-driven energy inflation.

First-quarter results missed expectations as costs and European pricing weighed

CEO Gordon Hardie said first-quarter adjusted earnings came in “below our original expectations,” citing “elevated commercial pressures in Europe and several one-time external events that increased our costs.” O-I posted adjusted earnings of $0.05 per share, down from $0.40 per share a year earlier, according to CFO John Haudrich.

Net sales were $1.54 billion, “essentially flat with the prior year,” Haudrich said, as favorable foreign exchange largely offset slightly lower average selling prices and a high single-digit decline in volumes. Segment operating profit totaled $142 million, down from $209 million in the prior-year quarter.

Haudrich also said earnings were affected by “an unusually high effective tax rate on low pre-tax earnings.” He added that as earnings improve, O-I expects a full-year tax rate of approximately 35% to 40%, with the potential to move lower in 2027 and beyond.

Volumes declined year over year, but improved through March

Hardie said first-quarter shipments fell about 8% versus the prior year, noting the comparison was “tougher” because last year likely benefited from customer pre-buys ahead of a new U.S. tariff regime. By end market, alcoholic categories were softest, while non-alcoholic beverages (NAB) and food held up better. Hardie highlighted that “food is now emerging as our second-largest category behind beer.”

Regionally, O-I saw declines in North America and Mexico amid spirits inventory adjustments, while South America delivered “mid to high single-digit growth,” Hardie said. In Europe, demand was softest in wine, especially in Southern Europe, and was impacted by an “extended negotiation period,” management said.

Management emphasized sequential improvement: Hardie said March volume was down only 2% versus the prior year. Based on that trend, the company reiterated its expectation for full-year sales volumes to be “about flat” with the prior year, with shipments expected to be stable in the second quarter and to grow low- to mid-single digits in the second half, supported by easier comparisons and new business wins.

“Fit to Win” cost program remains central as restructuring continues

Hardie said O-I is “at the halfway point” toward delivering $750 million of cumulative “Fit to Win” benefits through 2027 and remains ahead of schedule. In the first quarter, the company delivered about $50 million of gross benefits and $35 million of net benefits after headwinds from external disruptions in the Americas and transition costs tied to the closure of three plants in Europe.

Hardie said Phase A (SG&A streamlining and initial network optimization) generated $32 million of net benefits in the quarter and that organizational actions and plant capacity closures are expected to be largely completed by mid-2026. Phase B (end-to-end value chain transformation) was “slightly up” after absorbing disruption-related costs in the Americas, while procurement and energy initiatives are being accelerated to drive incremental savings. Hardie reiterated the company’s target of at least $275 million of Fit to Win benefits in 2026.

Americas stable; Europe profitability compressed by price and energy resets

Haudrich described a “story of two hemispheres.” In the Americas, the company’s top line was stable, and segment operating profit was $142 million, “essentially flat year-over-year.” He said the region benefited from higher net price, while lower volume and higher operating costs were headwinds. Those costs included $10 million of disruption-related expense tied to extreme weather, civil unrest in Mexico, and a natural gas pipeline failure in Peru, partially offset by Fit to Win.

Europe was the primary driver of the year-over-year decline in segment earnings. Haudrich said Europe segment operating profit was breakeven in the first quarter, down roughly $68 million from a year ago. The “biggest factor” was a $76 million reduction in net price, reflecting “elevated price competition” and the reset of favorable energy contracts that expired last year. Shipments in Europe were down 7% year over year, though Haudrich noted March shipments were up slightly versus the prior year.

During Q&A, management discussed competitive and utilization dynamics. Haudrich said the Americas had moved from “the low 90s to the upper 90s” in capacity utilization after restructuring, while Europe had been in the “low 90s” entering the year, with announced capacity closures underway. He said O-I expects to complete its European restructuring work by midyear and believes the utilization “roadmap seems to be improving.”

Guidance lowered; energy inflation and Europe risk adjustment drive outlook

O-I updated full-year 2026 guidance to adjusted earnings of $1.00 to $1.50 per share. Haudrich said the company “risk-adjusted” the European outlook by up to $25 million due to competitive pressures, net of additional cost actions and restructuring expected to support improved performance in the second half.

Haudrich called macro-driven energy inflation the “bigger swing factor” in the updated guidance, estimating it could total $75 million to $100 million. He said higher energy prices flow through natural gas, electricity, logistics, and certain raw materials. The company said its energy management limits further exposure, particularly in Europe, where approximately 75% to 80% of gas requirements are protected at prices favorable to current market levels, with higher protection in colder winter months.

In response to an analyst question on energy sensitivity, Haudrich said the company’s assumptions use a EUR 45 to EUR 55 per MWh range. For every EUR 5 drop on average below that range, O-I would “get back about $0.05 per share,” which he described as about $12 million of EBITDA. If energy rises above EUR 55, he said the company is “protected,” with risk of about $0.02 to $0.03 per share, or roughly $5 million.

Haudrich also addressed balance sheet concerns, stating the company was not near any risk related to secured debt metrics and had “$1.5 billion liquidity,” adding that O-I manages cash “very conservatively.”

Hardie said the company remains focused on its Investor Day objectives and expects improved momentum into 2027. He pointed to 15 confirmed incremental volume wins expected to contribute about 1.5% of new sales volume starting in the second half of 2026. During Q&A, he said those wins were currently split about 70% to 75% in the Americas and 25% to 30% in Europe, with Europe “building momentum.” He also said O-I is beginning to enter the ready-to-drink (RTD) category in North America following a regulatory change last year.

While acknowledging the first-quarter disappointment, Hardie said management believes demand has “bottomed out,” highlighted a narrowing cost gap between cans and glass that is driving increased customer interest in glass for beer, and reiterated confidence in the company’s ability to execute Fit to Win and pursue profitable growth as the year progresses.

About O-I Glass NYSE: OI

O-I Glass, Inc is a leading global manufacturer of glass containers, supplying the food and beverage, wine and spirits, pharmaceutical, cosmetic and personal care industries. Headquartered in Perrysburg, Ohio, the company produces a broad range of glass packaging solutions, including bottles and jars, designed to meet customer specifications for size, shape, color and performance. O-I leverages proprietary technologies in forming, decoration and quality control to serve both mass-market and premium brands.

Tracing its origins to the early 20th century through the merger of prominent regional glassmakers, the company adopted the Owens-Illinois name in 1929 before rebranding as O-I Glass in 2015.

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