O-I Glass (OI) Q3 2026 earnings review
O-I Glass cuts its plan again, but shipments fall less
O-I Glass, the bottle and jar maker, earned almost nothing in Europe while its Americas business kept its profit. Lower prices and higher energy and freight costs took $91 million out of European profit, so the glassmaker posted an adjusted loss. Chief executive Gordon Hardie cut the full-year profit plan again and now expects to use about $300 million of cash this year.
| Revenue | $1,623M −1.8% from a year ago |
|---|---|
| Europe segment operating profit | $2M $95M a year ago |
| Profit per share, excluding one-offs | −$0.09 $0.48 a year ago |
| Full-year adjusted EBITDA outlook | Cut to $925–950M $1,000–1,100M three months ago |
⚖️ Verdict: 🔴🔴 Very Bearish
The story got worse because the European recovery promised for the second half has not arrived, and O-I has withdrawn its 2027 targets. Next year now rests on recovering inflation through its contracts and on a cost programme trimmed twice since February. The good news: shipments shrank less each quarter this year, so volume should stop falling in the fourth quarter.
The question now is whether Europe's problem is price or O-I's own operations. If rivals' spare capacity keeps prices down, better plants cannot restore the margin; if O-I's own disruption caused the loss, profit returns as plants settle. Europe's fourth-quarter net price, and the 2027 plan due in February, will tell.
🐂 Bull Case
Americas Holds Profit on Price and Latin America
The Americas, O-I's business across North and South America, is now the only part of the glassmaker that earns a profit. The company said "shipment growth in Latin America largely offset headwinds in North America", and higher selling prices and favourable currencies did the rest.
- Sales: $970 million, up 3.2% from a year ago
- Selling prices: up 1.6%; sales volume: down 1.3% in tons
- Segment operating profit: $137 million, against $140 million that included a $6 million one-time insurance claim
- Segment margin: 14.1%, down 0.8 percentage points
Profit held because Fit to Win, O-I's cost-cutting programme, and currency gains covered the lost volume and a lower net price. Without last year's insurance claim profit rose about 2% by our math, so the region is still improving, but the thinner margin shows price gains no longer outrun cost inflation.
What to watch: Americas sales volume in the fourth quarter, when O-I expects shipments to stop falling. A positive number would show the US-Canada trade dispute and the Andean earthquake were one-quarter problems rather than a new trend.
Shipment Declines Shrink Each Quarter This Year
O-I sells bottles by the ton, and that number has fallen for seven quarters in a row. The decline is shrinking, from 8.8% in the first quarter to 1.9% in the third, because last year's comparisons are easier and new contracts have started to ship.
Management says those wins add about 4% of volume over time and expects fourth-quarter shipments flat to slightly up. This matters because every 1% of annual sales volume is worth about $0.07 of profit per share, by O-I's own sensitivity, so a return to growth would do more for earnings than any single cost action.
What to watch: fourth-quarter sales volume, due with year-end results in February. A positive number would be the first growth since early 2025 and would show the new contracts are shipping as promised.
🐻 Bear Case
Europe's Profit Is Gone, and Price Is Why
"We are beginning to see initial progress, with improving European production efficiency, better sequential shipment trends and continued Fit to Win cost reductions," chief executive Gordon Hardie said. Europe, where O-I makes about two-fifths of its sales, earned $2 million in the quarter against $95 million a year ago.
- Net price, what O-I keeps after energy, freight and other cost inflation: −$91 million, about 13 percentage points of last year's European sales
- Operating costs: +$5 million, helped by a plant efficiency measure called pack-to-pull about 1 point higher
- Sales volume: −3.7% in tons, with wine the weakest category
- Segment margin: 0.3%, from 13.8% a year ago
Hardie's progress is real but small, and it is not where the money went. Rivals have spare capacity, so customers in Southern Europe pay less, and energy and freight cost about $15 million more than management expected entering the quarter. Better plants cannot fix a price problem, which is why the first lever in O-I's recovery plan is commercial, not operational.
What to watch: Europe's net price line in the fourth quarter. Another large loss there would mean the contract-based inflation recovery promised for 2027 is not arriving, and the mid-teens margin target set in July moves further out.
O-I Drops 2027 Targets as Cash Burn Triples
Three months ago O-I planned to use up to $150 million of cash this year and to earn $1.2 to $1.3 billion of adjusted EBITDA in 2027. Both plans are gone. Finance chief John Haudrich now expects an outflow of about $300 million, and the company said it is "no longer maintaining its 2027 targets".
Softer shipments left more stock than planned, and buying gas hedges for next year costs $25 million, on top of lower profit and about $160 million of restructuring payments. Debt therefore does not shrink while earnings do.
- Net debt to adjusted EBITDA: 4.5 times, from 3.5 at the end of 2025; the plan has 4.5 to 5.0 by December
- Secured net leverage: 1.37 times, against a 2.5 times covenant
- Fourth quarter: by our math the new plan implies about $50 million of cash generation, against $309 million a year ago
This is a strain rather than a crisis, because the secured covenant has room and liquidity is $1.5 billion. But leverage near five times leaves little margin for another European miss, and the proposed plant closure in Europe will take more cash after this year. Haudrich says 2027 free cash flow will go to debt reduction.
What to watch: the 2027 free cash flow figure Haudrich has promised with year-end results in February. A positive number would mean leverage starts to fall without new borrowing.
Fit to Win Savings Target Cut Again
Fit to Win is O-I's three-year cost programme, and it is the main reason profit nearly doubled in 2025. This year it is losing ground: the programme delivered $50 million in the quarter, but the 2026 target has come down twice since February "given the pace of recovery in Europe".
- 2026 target by vintage: at least $275 million in February, at least $200 million in July, about $180 million now
- Total Organizational Effectiveness, the plant-efficiency phase: now a $10 million cost in 2026, against $80 million of savings planned in February
- Three-year total: at least $650 million, down from at least $750 million in February
This matters because the European plant work meant to produce savings this year now costs money, and the company says those benefits "shift to next year". A target that moves twice in a year is harder to rely on, and most of the 2027 increase of at least $170 million rests on the same plants.
What to watch: fourth-quarter Fit to Win benefits against the roughly $45 million left in the full-year target. A shortfall would mean next year's increase starts from behind.
👓 Other Themes
Energy, Freight and Trade Costs Rise Again
Energy and freight prices moved against O-I again this quarter. The full-year plan now carries about $100 million of inflation tied to Middle East conflicts, on top of the $150 million European energy contract reset flagged in February. O-I has hedged all of its fourth-quarter European gas and more than 90% of next year's, and its outlook allows for the "potential impact of U.S.-Canada trade disputes" on North American shipments.
Food and Soft Drinks Outgrow Wine
O-I said "Food & NAB sales trends continue to outperform Alcohol", where NAB means non-alcoholic beverages such as juice and water, and Latin America is ahead of its markets. Wine is the weak spot, above all in Southern Europe, where O-I calls it "a category that continues to suffer declining consumer and export volumes". The glassmaker has opened talks with employee representatives about closing one European plant.
💲 Other KPIs
Up from 34.4% a year ago, and the reason a small adjusted pre-tax profit became an adjusted loss. The rate climbs when European earnings fall because losses there earn no tax credit. O-I now expects 100% to 130% for the full year, where it expected 30% to 33% in February.
Down from $100 million a year ago and 5.0% of sales, the lowest share in at least five quarters. The full-year plan is about $425 million, and management points to about $400 million next year, so capital spending is one of the few levers still moving in cash flow's favour.
Down 3.9% from a year ago and below the $1,002 million at December. Even so, the company says stock is higher than it planned because shipments were soft, and the free cash flow plan now carries a $60 million inventory headwind, so the year-end plan depends on selling that stock down in the fourth quarter.
🔮 Guidance
Cut. The plan now has adjusted EBITDA falling about 23% this year, against the up to 7% growth planned in February. By our math, that leaves about $210 million for the fourth quarter, down 24% from a year ago. The previous plan had pointed to about $320 million. Third cut in three quarters, and the middle of the range has moved down by $100 million or more each time; about 70% of the latest cut sits in Europe.
Cut. The glassmaker now expects to use roughly $300 million of cash this year, having planned to generate about $200 million in February. By our math, that leaves a fourth-quarter inflow of around $50 million, a sixth of last year's. The extra outflow comes from lower profit, more inventory than planned and cash spent on energy hedges, while capital spending stays near $425 million.
Raised, to the worse. Net debt was 4.5 times adjusted EBITDA at the end of September, and the plan has the ratio at up to five times by December as profit falls faster than debt. Every update this year has moved the year-end ratio up, from the low threes in February.
Cut. The plan now has full-year shipments down 3 to 4% in tons, where July's outlook said down slightly. Because the first nine months fell about 5.5%, by our math the range implies the fourth quarter flat to slightly up, which matches the separate fourth-quarter outlook.
Cut. In July the plan had the whole second half growing at a low-single-digit rate; the third quarter fell 1.9% instead, so the company now applies that rate only to the fourth quarter, with flat as the floor. Easier comparisons help, because shipments dropped 7.4% in the final quarter of 2025, and new contracts begin to ship.
Withdrawn. O-I "is no longer maintaining its 2027 targets" and will give numbers with year-end results in February. Finance chief John Haudrich lists the levers: better net price through commercial work and contract pass-through, stable volume, at least $170 million of Fit to Win savings and lower restructuring costs, against higher interest and slightly more maintenance spend. July's target had itself been cut from the $1.45 billion set at the 2025 investor day.
New. In late October O-I started a process with employee representatives over the proposed permanent closure of one European production facility; no decision is final until that process ends. The company expects charges of $100 to $120 million in the fourth quarter, of which $40 to $50 million is cash it will pay later.
❓ Key Questions
Which European plant closes, and how much capacity goes?
O-I has opened talks on one permanent closure but names neither the site nor the tons removed. Readers cannot judge how much it tightens the Southern European network, where wine demand keeps falling and rivals still have spare capacity.
How much European price comes back through contracts next year?
In July management said more than half the business sits under long-term agreements that recover inflation with a lag, making 2027 net price neutral to positive. After a $91 million quarterly hit, the size and timing of that recovery decides whether Europe earns anything next year.
What does higher mean for 2027 adjusted EBITDA?
The company dropped its $1.2 to $1.3 billion target and promises only an increase on 2026. With leverage heading toward five times, lenders and investors need the number, not the direction, before the February results.
How much of the inventory build unwinds in the fourth quarter?
The plan now counts a sizeable inventory headwind caused by softer shipments. If the fourth quarter sells that stock down, cash improves; if O-I cuts production instead, profit falls because fewer tons carry the same fixed costs.
What did the trade dispute and the Andean earthquake cost?
Both appear as reasons for the 1.3% Americas volume decline, but neither carries a figure. Without one, readers cannot tell how much of the fourth-quarter volume outlook depends on these two problems not repeating.