O-I Glass Q2 Earnings Call Highlights

Key Points

• O-I Glass missed its Q2 expectations: Sales fell about 2% to nearly $1.7 billion, while adjusted EPS declined to $0.09 from $0.53, partly due to an unusually high tax rate. Strong Americas performance was offset by a sharp deterioration in Europe.
• The Americas delivered a 22% increase in segment operating profit to $165 million, but European profit plunged to $6 million from $90 million due to pricing pressure, higher energy costs, plant disruptions and furnace incidents.
• O-I lowered its 2026 adjusted EBITDA outlook to $1.0 billion–$1.1 billion and reset its 2027 target to $1.2 billion–$1.3 billion. Management still views the original $1.45 billion goal as achievable, but expects to reach it later as European operations recover and Fit to Win savings build.

O-I Glass NYSE: OI reported second-quarter results that fell below its expectations, as strong performance in the Americas was more than offset by a steep decline in Europe. The company said it is maintaining its strategic direction but has reduced its 2026 outlook and recalibrated its 2027 targets to reflect a slower improvement path in its European operations.

Second-quarter net sales were nearly $1.7 billion, down about 2% from the prior year, while adjusted earnings were $0.09 per share, compared with $0.53 per share a year earlier. CEO Gordon Hardie said an unusually high adjusted tax rate reduced quarterly results by $0.18 per share.

Global shipments declined about 4.5% year over year, though volume trends improved during the quarter and June shipments were flat with the prior year. Hardie said operational disruptions accounted for roughly half of the overall shipment decline.

Americas Strength Contrasts With European Pressure

In the Americas, net sales rose about 1% to $949 million, supported by higher selling prices and favorable currency effects despite a 7% volume decline. Segment operating profit increased 22% to $165 million, and margins expanded by approximately 300 basis points to 17.4%.

Hardie described the quarter as the Americas’ highest second-quarter profit in the past 10 years. Higher net prices, foreign exchange and operating-cost improvements offset lower volumes and the impact of a furnace event, according to CFO John Haudrich.

European results were substantially weaker. Net sales in the region fell 5% to $704 million, while segment operating profit dropped to $6 million from $90 million a year earlier. Shipments declined 2%, primarily because operational disruptions constrained the company’s ability to serve customers. Excluding that disruption, underlying European volume trends were roughly flat, management said.

O-I attributed Europe’s performance to competitive pressure on selling prices, higher energy costs tied to the Middle East conflict, operational inefficiencies following restructuring at multiple plants, and two furnace events. Hardie said one event in France was a fire and another in the U.K. involved a leak. The incidents placed added strain on a changing supply network after three plant closures and contributed to higher logistics costs.

Management said both affected plants were repaired and were increasing supply through July. The company also cited one-time disruptions including unavailable rail transportation in France that required a shift to more costly road freight.

Fit to Win Savings Program Remains Central

O-I said its Fit to Win cost and operating-improvement program has generated more than $400 million in net benefits since its launch. The company produced $85 million of benefits through the first half of 2026, net of $30 million in direct operating inefficiencies. Including constrained sales opportunities and additional logistics expense, the total effect of disruptions was approximately $45 million.

The company revised its 2026 Fit to Win savings target to approximately $200 million but retained a three-year target of at least $650 million. Haudrich said just under half of the expected $115 million to $120 million of second-half savings was “locked and loaded” through completed restructuring and selling, general and administrative actions. He said roughly one-third of the expected 2027 savings would be carryover benefits from actions already underway.

Hardie said Europe is about a year behind the Americas in implementing Fit to Win and total operating efficiency practices. He said the company expects European operational performance to improve over the next several quarters, with a goal of reaching mid-teen segment profit margins within two years. That outlook assumes some normalization in energy markets and demand conditions, as well as completion of the company’s operational initiatives.

Updated 2026 Outlook and Rebased 2027 Targets

O-I withdrew its adjusted earnings-per-share guidance, saying the effective tax rate has become highly sensitive to operating earnings given the low level of anticipated European profit. The company now expects adjusted EBITDA of $1 billion to $1.1 billion for 2026.

Haudrich said the revised 2026 outlook primarily reflects continued European market challenges, additional selling-price pressure, higher energy costs, delayed Fit to Win benefits due to disruption, and added costs at several plants. He said Europe is expected to improve sequentially during the second half, while the Americas is still anticipated to deliver results nearly 60% above 2024 levels in 2026.

For 2027, O-I now expects adjusted EBITDA of $1.2 billion to $1.3 billion, including at least $150 million of additional Fit to Win savings. Management said its assumptions continue to reflect muted market conditions, including relatively flat volume expectations and current elevated energy prices. Potential upside could come from improved European demand or energy-price normalization following a resolution of the Middle East conflict.

The company continues to view its original $1.45 billion adjusted EBITDA target as achievable, though Hardie and Haudrich said reaching that level will likely take longer than initially anticipated.

Commercial Wins and Regional Demand Trends

O-I said its commercial transformation is producing new business wins representing approximately 2% of annual sales volume. Management expects the wins to begin contributing during the second half and build further in 2027. Haudrich said the contracted business could add roughly 1% to 1.5% of annualized volume during the second half.

Hardie said July trends across the company’s markets generally remained in line with June, though one geography was still working through supply constraints related to a furnace event. He said those constraints were expected to be resolved after July.

The company cited continued strength in nonalcoholic containers, food, and several Latin American markets. The Andean group delivered double-digit growth, while Brazil posted low-single-digit growth. Hardie said O-I’s businesses in Brazil, the Andean region and Mexico were executing well on cost and commercial initiatives, although Mexican volume was affected by lower tequila exports and Mexican beer imports into the U.S.

“We are recalibrating timing, not changing direction,” Hardie said, emphasizing that the company’s immediate priorities are restoring European performance, improving execution and pursuing profitable growth.

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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