S&P revises Avery Dennison outlook to negative

Standard & Poor's Ratings Services revised its outlook for Avery Dennison Corp. to negative from stable Wednesday, a day after the adhesive label maker slashed its 2008 profit expectations.

The agency also affirmed its ratings, including a "BBB+" long-term and "A-2" short-term, for the Pasadena, Calif.-based company.

Standard & Poor's credit analyst Cynthia Werneth said the outlook revision reflects significant inflationary cost pressures and soft market conditions, particularly in retail information services.

"That could make it more difficult for Avery to generate sufficient discretionary cash flow to meaningfully reduce debt to appropriate levels for the ratings within the next one or two years," she said in a statement.

On Tuesday, Avery Dennison said it expected full-year earnings per share of $3.75 to $3.95, excluding a 40 cents per share charge for restructuring, asset impairment and acquisition integration.

Analysts polled by Thomson Financial, on average, expect 2008 earnings per share of $4.00.

Avery Dennison said its revised expectations reflect slower growth in Europe, Asia and the United States.

Shares of Avery Dennison fell 13 cents to close at $44 Wednesday.