Avery Dennison Corporation

What they do

Avery Dennison designs and manufactures pressure-sensitive label materials, graphics and reflective materials, functional bonding materials such as tapes, and RFID inlays and tags, along with software applications connecting physical products to digital data. It sells into home and personal care, apparel, general retail, e-commerce, logistics, food and grocery, pharmaceuticals and automotive end markets. As of December 31, 2025, it operated over 200 manufacturing and distribution facilities in more than 50 countries, with roughly 69% of net sales originating outside the U.S.

Revenue drivers

• Materials Group — The larger segment at approximately 69% of fiscal 2025 net sales; sells Fasson-, JAC- and Avery Dennison-brand pressure-sensitive label materials, Avery Dennison- and Mactac-brand graphics, reflective products and performance tapes through a converter channel. In Q2 2026 reported sales rose 15.9% to $1.8 billion, with organic growth of 9.7%.
• Solutions Group — Approximately 31% of fiscal 2025 net sales; provides RFID inlays and tags, branded packaging and information-carrying offerings, with significant apparel exposure. Q2 2026 reported sales fell 0.5% to $667 million, though sales were up 2.6% on both an ex-currency and organic basis.
• High-value categories — Company-defined higher-value product lines within both segments; in Q2 2026 these grew mid-single digits in Materials Group and low single digits in Solutions Group.
• Base categories — Core label and materials volumes; in Q2 2026 base categories grew low double digits in Materials Group and low single digits in Solutions Group, and overall apparel categories rose high single digits.

Recent performance

For Q2 2026 ended June 30, 2026, net sales were $2.5 billion, up 10.9% as reported, up 8.9% ex-currency and up 7.6% organically. Reported EPS was $2.67 and adjusted EPS was $2.89, up 19.4% year over year. Materials Group reported operating margin of 15.6% and adjusted operating margin of 15.8%, up 20 basis points, while Solutions Group reported operating margin of 8.9% and adjusted operating margin of 11.5%, up 150 basis points. Full-year 2025 net sales were $8.86 billion with net income of $688.0 million and diluted EPS of $8.79. The reported effective tax rate was 27.8% for Q2 2026.

Strategy

Management describes a focus on innovation and service-led differentiation, which it credits for organic growth in both high-value and base businesses. The company continues to run a productivity program to expand margins, and in the first half of 2026 realized approximately $34 million in pre-tax savings from restructuring actions while incurring approximately $34 million in pre-tax restructuring charges. Capital allocation priorities include shareholder returns: in the first half of 2026 the company returned $347 million through share repurchases and dividends, repurchasing 1.2 million shares for $198 million, and share count was down 2.1 million year over year net of dilution from long-term incentive awards. Net debt to adjusted EBITDA was 2.3x at the end of Q2 2026.

Risks

• International and tariff exposure — Approximately 69% of 2025 net sales originated outside the U.S., and the company cites U.S. tariffs including a 10% global baseline rate plus higher tariffs on Canada, Mexico, China and the European Union, with reciprocal measures from those trading partners.
• Demand and macroeconomic conditions — The company states that demand for its products is affected by worldwide economic, geopolitical, social and labor conditions, including inflation in raw material, energy and freight costs and slower growth in the regions where it operates.
• Competition and pricing — Management flags competitors' actions, including pricing and expansion in key markets, and the risk that higher costs cannot be offset through productivity or passed to customers without significant volume loss.
• Raw material and foreign currency — The company identifies the cost and availability of raw materials and foreign currency fluctuations among the most significant near-term risk factors affecting financial performance.

Outlook

For full-year 2026, the company guides to reported EPS of $9.40 to $9.70 and adjusted EPS of $10.00 to $10.30, excluding an estimated $0.60 per share impact of other items and restructuring charges. Management stated that Q2 results reflected stronger-than-anticipated sales growth, solid margin expansion and execution, and said it is building on that momentum for the remainder of 2026 and beyond.