Glass packaging giant O-I Glass has reported a challenging second quarter, marked by declining sales and profits.

The company attributed the performance to a combination of softer macroeconomic conditions and ongoing destocking within the supply chain.

Net sales for the quarter totalled $1.7bn, a 11% decrease compared to the same period in 2023.

O-I Glass said this decline was primarily driven by a 4.5% drop in sales volume, as customers continued to reduce inventory levels.

Average selling prices also declined during the quarter.

Segment operating profit fell to $233m from $326m in the prior year.

Both O-I's Americas and Europe segments experienced profit erosion due to lower volumes and increased operating costs.

In response to this challenging environment, O-I Glass has unveiled a new strategic initiative, ‘Fit To Win', designed to enhance the company’s competitiveness and profitability.

The programme focuses on cost reduction, operational efficiency, and customer satisfaction.

“Fit To Win is expected to significantly boost performance over the next three years through a series of focused efforts that are largely within our span of control,” said Gordon Hardie, O-I Glass' CEO.

As part of the plan, the company will undertake a significant restructuring, including the closure of at least six furnaces over the next three quarters.

O-I Glass expects these actions to reduce costs, optimise its production network, and improve overall performance.

Looking ahead, the company has lowered its full-year guidance to reflect the softer market conditions.

Sales volume is now projected to be flat or slightly down compared to 2023.

Adjusted earnings per share are expected to be in the range of $1.00 to $1.25.

“Turning to recent performance, our second-quarter net earnings attributable to the company were down from the historically strong performance in the prior year,” added Hardie.

“However, we did see good sequential improvement in year-over-year shipments as destocking across the value chain moderated. While the pace of recovery has been slower than expected, we anticipate year-over-year sales volume growth beginning in the second half of 2024 and stronger future earnings as we implement our Fit To Win programme.”

Despite the short-term challenges, O-I Glass remains confident in the long-term prospects for glass packaging.

The company believes that its strong market position, coupled with its ongoing transformation efforts, will enable it to emerge from the current downturn stronger than before.