Avery Dennison beats quarterly profit estimates on premium demand

Feb 4 (Reuters) - Labeling materials maker Avery Dennison AVY.N beat fourth-quarter profit expectations on Wednesday, citing demand growth in high-margin premium offerings.

Challenging macroeconomic conditions have kept industrial customers focused on cost controls, making them cautious about placing forward orders.

Demand for premium products, however, has remained resilient, with manufacturers increasingly relying on higher-margin offerings to help protect profitability.

Avery has also benefited from targeted price hikes to shrug off tariff impact.

"Despite tariff-related impacts and softer consumer volumes, our team successfully leveraged our proven productivity playbook to maintain an adjusted EBITDA margin of 16.4% and generate over $700 million in adjusted free cash flow,” CEO Deon Stander said.

High-value categories now represent about 45% of the company's total revenue, he added.

The Ohio-based company expects first-quarter adjusted profit per share of $2.40 to $2.46, largely in-line with analysts' average expectations of $2.43, according to data compiled by LSEG.

Avery's materials segment, which is its largest by revenue and sells pressure-sensitive label materials and adhesive products for industrial and medical applications, reported a 5.1% rise in net sales to $1.55 billion from a year ago.

The company, which caters to customers as diverse as retail giant Walmart and Spanish soccer club Real Madrid, posted fourth-quarter adjusted profit per share of $2.45, beating analysts' expectations of $2.40.

Total quarterly net sales of $2.27 billion were up from $2.19 billion a year ago, compared with Wall Street expectations of $2.28 billion.