Chavez takeover costs O-I $329m
However, full year operating profits were boosted by the company’s investments in emerging markets.
Nationalise
In November last year, officials and military personnel from the Venezuelan Government officially took control of O-I operations in the country on the orders of President Hugo Chavez.
"O-I has deemed the disposal of its expropriated Venezuelan operations as complete effective December 31, 2010. As a result, the Venezuelan business has been reflected in the Company’s financial statements as discontinued operations, and the Company has taken a one-time charge of approximately $329m to write-off the Venezuelan net assets," said the company.
The glass packaging giant said it is continuing to negotiate with the Venezuelan government in respect to certain aspects of the expropriation, such as compensation.
The firm said it would obey all national laws but that no agreement had been reached with the Chavez administration over compensation for the facilities.
During almost 12 years in office, the Venezuelan leader has attempted to nationalise a string of local corporate subsidiaries in what he claims is a bid to relieve poverty.
In March 2009, Chavez ordered the seizure of 1,500 acres of land owned by Irish packaging producer Smurfit Kappa Cartons. Last year the leader also announced government plans to copy packing technology developed by packaging giant Tetra Pak, in a bid to cut back on imports and reliance on foreign companies.
Emerging markets sales boost
Earnings from continuing operations for the full year was $258m for 2010, compared to $110m the year before.
Operating profit in 2010 was $964m, compared to $891m in 2009.
Despite the setback in Venezuela, the company reported a full year operating profit of Q4 operating profits were $221m, up from $174m in 2009.
Results were boosted by its investments in emerging markets, which drove a $73m increase in segment operating profit compared to 2009, claims the packaging manufacturer.
Last year O-I added 10 plants in rapidly growing emerging markets through acquisitions and joint ventures in South America, Latin America and Southeast Asia. The company also built three new furnaces in Argentina, Peru and New Zealand to support future growth.
CEO Al Stroucken said, “Shipments should increase due to organic growth
and benefits from recent acquisitions.”
Higher selling prices will partially offset additional cost inflation, according to the CEO.
“As capital investments and restructuring payments will decline significantly from 2010 levels, we expect free cash flow will approximate $300m in 2011,” he said.
