How Does Avery Dennison Company Work?

The Materials Group is the larger segment, accounting for approximately 69% of total net sales in 2024. It is a leading global supplier of pressure-sensitive materials for labels and graphics. This includes a wide array of products such as label materials, graphics, reflective materials, and performance tapes. These are critical components for industries like home and personal care, food, and automotive, forming the backbone of how products are identified and presented.

The Solutions Group, contributing about 31% of net sales in 2024, focuses on information and branding solutions. This segment specializes in areas like RFID solutions, brand embellishments, and sustainable packaging. Its core mission is to help customers connect the physical world with the digital realm through advanced digital identification and data management capabilities.

The company's operational processes are supported by extensive manufacturing capabilities and global sourcing networks. Continuous investment in technology development, particularly in intelligent labels and sustainable materials, is key. The Avery Dennison business model leverages its materials science expertise to drive innovation, enhance supply chain efficiency, reduce waste, and improve product transparency.

With approximately 70% of net sales generated from international operations in 2024, the company has a significant global footprint. Emerging markets represent about 40% of these net sales, highlighting its extensive reach. This global presence, combined with its leadership in materials science and its proven Intelligent Labels platform, provides a distinct competitive advantage.

Avery Dennison invested $301.8 million in research and development in 2024. This focus drives the creation of cutting-edge materials and digital identification solutions.

The Intelligent Labels segment experienced significant growth in 2024, boosted by increased adoption in retail and logistics. This segment is crucial for accessing new customers and diversifying revenue streams.

Acquisitions like those of Lion Brothers and Thermopatch, Inc. have broadened the company's product offerings within the Solutions Group. These moves enhance the Avery Dennison business model by integrating new capabilities.

The company has implemented restructuring actions to streamline its European operations and improve productivity. This demonstrates adaptability in managing operational challenges and optimizing the Avery Dennison manufacturing process.

The company holds a dominant position in its key markets, particularly in Intelligent Labels, where its UHF/RAIN RFID solutions command a market share exceeding 50% in its primary business areas, and even higher within the apparel sector.

Avery Dennison faces risks from geopolitical and economic instability, evolving trade policies, and the impact of tariffs. For instance, apparel growth is projected to decrease by mid-single digits in Q2 2025 due to sourcing and pricing challenges related to tariffs.

Despite current headwinds, the company anticipates net sales growth in 2025, driven by volume increases across its Materials Group and Solutions Group segments. This growth is supported by strategic initiatives focused on high-value categories.

For 2025, reported earnings per share (EPS) are forecasted between $9.55 and $9.95, with adjusted EPS projected at $9.80 to $10.20, representing a 7% to 12% increase excluding currency fluctuations.