O-I Glass Q2 EPS Beats by 29%

O-I Glass (OI 0.58%), a global supplier of glass containers to the food and beverage industry, released its second quarter fiscal 2025 results on July 30, 2025. The headline from this report is a sizeable earnings beat: adjusted earnings per share (EPS, non-GAAP) reached $0.53, well above the analyst consensus of $0.41 (non-GAAP). Revenue (GAAP) was reported at $1.7 billion, but marginally down from the prior year’s figure. While the Americas drove margin gains, Europe posted significant declines in segment operating profit. Large restructuring and asset impairment expenses -- primarily from halting the MAGMA innovation program -- dragged down GAAP profitability, leading to a reported net loss. Overall, the quarter showed strong cost discipline and operating improvements in key regions, but ongoing business transformation and uneven demand remain critical themes.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

O-I Glass is a leading producer of glass packaging for the global food and beverage industry, serving many well-known consumer brands. Its core business is the manufacture of glass bottles and containers, mainly in the Americas and Europe. Glass packaging is prized for being pure, recyclable, and suitable for food and drinks -- giving the company a niche in packaging where sustainability is valued.

In recent years, the company has concentrated on programs to boost profitability and efficiency. Its "Fit to Win" cost optimization initiative remains central, driving restructuring, plant closures, and operational streamlining. Other focus areas include advancing new glass manufacturing technologies, improving energy management, and responding to changes in demand across regions.

Quarter in Review: Results and Drivers

The second quarter showed significant divergence between regions. In the Americas, the company reported a 38% increase in segment operating profit compared to the prior year period, supported by a 4% increase in sales volumes in the Americas compared to the prior year period and lower operating costs, reflecting efficiency gains. These benefits stemmed mainly from the Fit to Win initiative, which delivered year-to-date cost reductions of $145 million in the first half of 2025. Management highlighted these actions as exceeding initial goals, contributing directly to Americas profitability.

Here, segment operating profit dropped 29% compared to the prior year period as sales volumes declined 9% compared to the prior year period and operating margin narrowed. The decline stemmed from soft demand, more production curtailments, and lower net prices due to intense competition. Unfavorable operating conditions and region-specific dynamics resulted in increased temporary shutdown costs and a weaker margin profile for the segment.

On a consolidated basis, revenue (GAAP) was essentially flat year over year. However, large one-time charges—primarily $108 million related to halting the MAGMA technology program—weighed on the reported net result, leading to a net loss attributable to the company of $(0.03) per diluted share (GAAP). Earnings before income taxes (GAAP) dropped to $7 million compared to $104 million in Q2 2024, with underlying segment results less volatile than the headline numbers suggest.

The quarter also saw a major strategic course correction. O-I Glass made the decision to discontinue development on MAGMA, its ambitious next-generation manufacturing platform. The company stated that MAGMA lacked a path to delivering sufficient operational or financial returns. Instead, it will redirect focus to what it describes as the "Best at Both" strategy: emphasizing output of premium containers at lower cost and capital intensity in retooled facilities, such as its Bowling Green, Kentucky plant. This strategy is intended to improve performance by sharpening operational focus.

Beyond the Americas and Europe story, management signaled further capacity rationalizations are ahead. In the quarter, it finalized the indefinite suspension of one furnace and the closure of one plant in the Americas, aiming to drive more network efficiency. Upcoming quarters are expected to see additional restructuring costs of approximately $45 million in Q3 2025.

Amid all these changes, energy management continues to play an important role in controlling costs, with most energy contracts locked in at rates set prior to recent geopolitical disruptions. Management noted it is layering future energy contracts to smooth volatility, with no reported near-term cost shocks but some longer-term pressures expected once current hedges expire.

Other notable developments included continued execution of cost control at the corporate level, partially offset by higher incentive expenses, and no major moves in geographical expansion or partnerships were highlighted this period.

Looking Ahead

Management raised its full-year 2025 adjusted (non-GAAP) EPS guidance to a range of $1.30 to $1.55, up from $1.20 to $1.50. This implies a 60% to 90% increase over FY2024’s adjusted (non-GAAP) result of $0.81. Leadership assumes stable sales volumes, unchanged foreign exchange rates, and a full-year adjusted effective tax rate between 33 and 36 percent. The free cash flow target (non-GAAP) was maintained at $150 million to 200 million, a turnaround from cash outflows seen last year, even after factoring in anticipated restructuring charges of $140 million to $150 million.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.