Avery Dennison Reports Preliminary Second Quarter 2025 Results, Showcasing Resilient Performance Amid Trade Policy Shifts
Avery Dennison Corporation a global leader in materials science and digital identification solutions, has announced its preliminary, unaudited financial results for the second quarter of 2025, which ended on June 28. Despite facing a dynamic and uncertain trade environment, the company delivered a performance that surpassed expectations, underscoring the strength and adaptability of its diversified portfolio.
Leadership Commentary
“We delivered a solid second quarter, with earnings above expectations in a dynamic environment, reflecting the strength of our overall portfolio,” said Deon Stander, president and CEO of Avery Dennison. Stander acknowledged the headwinds created by evolving trade policies but emphasized the company’s ability to offset those challenges through growth in high-value categories and disciplined execution in its core operations.
“While trade policy changes led to lower sourcing demand for apparel and general retail categories in the quarter, growth in our high-value categories and productivity in the base business offset the impact from tariffs,” he explained.
Stander added that the broader implications of global trade policy remain uncertain. However, Avery Dennison is preparing for multiple scenarios, relying on its strategic playbook to both safeguard earnings and drive continued profitable growth. He further praised the resilience and dedication of the company’s workforce, stating, “Once again, I extend my gratitude to our agile, engaged, and talented team for their unwavering focus on excellence and dedication to addressing the current challenges at hand.”
Segment Performance Overview
Materials Group
The Materials Group posted reported sales of $1.6 billion for the quarter, representing a slight year-over-year increase of 0.2%. On an organic basis, however, sales declined by 1.0%. High-value product categories—including Intelligent Labels—grew in the low single digits, helping to partially offset weaker performance in base categories.
Specific business segments within the Materials Group delivered mixed results:
- Label Materials recorded a modest decline in the low single digits.
- Graphics and Reflective Materials experienced a strong upswing, increasing by high single digits.
- Performance Tapes and Medical segments grew in the low single digits.
The group’s reported operating margin was 16.1%, while the adjusted operating margin (non-GAAP) stood at 15.6%, down by 20 basis points compared to the prior year. The adjusted EBITDA margin came in at 17.8%, reflecting a 10-basis point decline. This margin compression was attributed to the balancing act between productivity gains and higher input costs, especially related to raw materials and pricing adjustments.
Solutions Group
The Solutions Group reported a decline in quarterly sales, which dropped 2.6% to $670 million. On an organic basis, the drop was more modest at 0.8%. Like the Materials Group, high-value categories were a bright spot—especially Intelligent Labels—which were stable compared to the prior year.
Further performance details within the Solutions Group included:
- Vestcom sales rose approximately 10%, marking one of the strongest performers in the segment.
- Embelex, on the other hand, saw a notable decline, falling by high single digits.
- Base categories and overall apparel-related sales were down by mid-single digits.
Despite the top-line pressure, the Solutions Group maintained operational efficiency. The reported operating margin was 8.9%, and the adjusted operating margin was 10.0%, a slight dip of 10 basis points. However, adjusted EBITDA margin rose by 30 basis points to 17.1%, helped by internal productivity improvements even as the segment faced lower apparel volumes and invested in future growth.
Financial Highlights
Capital Deployment and Balance Sheet
In the first half of 2025, Avery Dennison returned a total of $503 million to its shareholders through a combination of share buybacks and dividend payments. The company repurchased 2 million shares at a total cost of $360 million. After accounting for dilution from long-term incentive programs, the total share count was reduced by 2.8 million compared to the same period in 2024.
In the second quarter, Avery Dennison increased its quarterly dividend to $0.94 per share, which reflects a 7% hike over the previous rate—demonstrating continued commitment to delivering shareholder value.
The company’s balance sheet remains in strong condition. Net debt to adjusted EBITDA (non-GAAP) stood at 2.3x at the end of the second quarter, allowing continued flexibility for disciplined capital deployment aligned with long-term strategic priorities.
Income Taxes
Avery Dennison reported an effective tax rate of 26.0% for the second quarter. The adjusted effective tax rate (non-GAAP) was also consistent at 26.0%.
Restructuring and Cost Reduction Efforts
The company remains committed to cost discipline and efficiency enhancements. In the first half of 2025, Avery Dennison achieved approximately $30 million in pre-tax savings through restructuring efforts, net of transition costs. These efforts incurred $13 million in pre-tax restructuring charges, indicating a deliberate approach to streamlining operations while preparing for future growth.
