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2017-02-01

Owens-Illinois, Inc.: O-I REPORTS FULL YEAR AND FOURTH QUARTER 2016 RESULTS; Entering next phase of transformational journey as Company delivers strong financia

FOR IMMEDIATE RELEASE

O-I REPORTS FULL YEAR AND FOURTH QUARTER 2016 RESULTS

Entering next phase of transformational journey as Company delivers
strong financial performance for 2016

PERRYSBURG, Ohio (Feb. 1, 2017)
- Owens-Illinois, Inc. (NYSE: OI) today reported financial results for the
full year and fourth quarter ended Dec. 31, 2016.

* For the full year 2016, the Company recorded earnings from continuing
operations of $1.32 per share (diluted), which compares favorably with
$0.85 per share in 2015.
* Excluding certain items management considers not representative of ongoing
operations, adjusted earnings[1]were $2.31 per share. This was up 15
percent compared with prior year and in line with guidance of $2.27 to
$2.32 per share.
* The Company continues to generate strong cash flows. Cash provided by
continuing operating activities for 2016 was $758 million compared with
$612 million for 2015. Adjusted free cash flow1for 2016 was $429 million,
up 23 percent compared with the $348 million reported last year. Adjusted
free cash flow excludes asbestos-related payments.
* Global volumes for 2016 were up 9 percent compared to the prior year. Key
contributors to growth were the acquired business, Europe, legacy North
America, as well as Australia and New Zealand. On a global basis, volumes
of all major end use categories grew year-on-year. Excluding the overall
decline in shipments in Asia Pacific, organic growth increased
approximately one percent.
* Earnings from continuing operations before income taxes were $356 million
for the year compared with $268 million for 2015. Segment operating profit
of reportable segments1for 2016 was $882 million, an increase of 19 percent
compared with prior year. While all regions except Asia Pacific posted
higher segment operating profit compared with prior year, the increase was
largely driven by the acquired business.
* Strategic initiatives, primarily in manufacturing, contributed
approximately $55 million to segment operating profit for the year,
consistent with commitments made by management at investor day in early
2016.
* The Company's disciplined capital allocation continues to favorably impact
its debt structure. Total debt in 2016 declined $245 million, primarily due
to debt repayments as well as the favorable impact of foreign currency.
* The Company improved its debt profile in the fourth quarter through the
issuance of a 500 million euro, eight-year, fixed-rate bond with a very
favorable coupon of 3.125 percent. This transaction increased the
proportion of fixed-rate debt to nearly two-thirds, augmented the natural
hedge to foreign currency exposure, repaid higher-cost floating-rate debt
and extended the Company's debt maturity profile.
* In 2017, the Company expects to deliver higher earnings from continuing
operations mainly driven by higher segment operating profit. Earnings from
continuing operations, and adjusted earnings, are expected to be in the
range of $2.40 to $2.50 per share. Cash provided by continuing operating
activities is expected to be approximately $730 million, whereas adjusted
free cash flow for the year 2017 is expected to be approximately $365
million.

CEO Andres Lopez stated, "Our multi-year transformation is off to a strong
start - we achieved the key financial targets that we outlined at investor
day in early 2016. Margins[2]expanded more than 100 basis points, due to the
benefits of our strategic initiatives and the acquired business. We are
executing on our strategy, overcoming visible external challenges from Brazil
macros, the Brexit vote and the strengthening U.S. dollar.

"Looking ahead, we expect continued improvement in our top-line and
bottom-line results as we advance to the next stage in our transformational
journey - from stability to agility. We will augment our ability to adapt to
market changes and invest in new capabilities. In all, we are one enterprise
solely executing on one plan with focus, rigor and discipline everywhere to
further enhance shareholder value."

Fourth Quarter 2016 Results

For the fourth quarter 2016, the Company recorded a loss from continuing
operations of $0.43 per share (diluted), which compares with earnings from
continuing operations (diluted) of $0.04 per share in the same period of
2015. Loss from continuing operations before income taxes was $39 million in
the quarter, which was unfavorable by $87 million compared with the same
period in prior year. These figures include significant items that management
considers not representative of ongoing operations.[3]In the fourth quarter,
the Company incurred restructuring and impairment charges of $110 million,
primarily driven by anticipated restructuring activity in Europe, Latin
America and at corporate, as well as a settlement charge of $98 million
related to actions to de-risk pension liabilities.

Excluding certain items management considers not representative of ongoing
operations, adjusted earnings were $0.50 per share. Adjusted earnings
increased 25 percent, or $17 million compared with prior year, a great
achievement in light of ongoing currency headwinds and recognizing that both
periods reflected results from the acquired business.

Net sales in the fourth quarter of 2016 were $1.6 billion, up 1 percent from
the prior year fourth quarter. Price was up $27 million on a global basis,
primarily driven by price adjustments that reflect cost inflation. Currency
translation adversely impacted net sales by $16 million, or 1 percent.

Global sales volumes increased 1 percent compared to the fourth quarter of
2015. Shipments in Europe increased 3 percent, mainly due to gains in beer
and food shipments. In Latin America, shipments increased nearly 3 percent
with higher shipments in all product categories except wine, which was down
slightly. North America volumes were similar to the prior year with higher
non-alcoholic beverage and spirits shipments offsetting lower food and beer
shipments. Fourth quarter shipments in Asia Pacific were 6 percent below the
same period of 2015. In the mature markets of Asia Pacific, sales volumes
were similar to prior year, despite lower in-country production volumes due
to planned engineering activity. Sales volumes in mature markets in Asia
Pacific were supported by shipments from China; in turn, domestic sales there
declined.

Segment operating profit was $201 million in the fourth quarter, 8 percent
higher than prior year fourth quarter.

* Europe reported segment operating profit of $45 million, which was $17
million, or 61 percent higher than the prior year quarter. The gain in
sales volume and benefits from manufacturing initiatives more than offset
price-cost pressure in the region. Europe received an energy credit in the
quarter that had been delayed for legislative reasons since 2015. Excluding
the energy credit, Europe posted approximately 25 percent higher segment
operating profit than the fourth quarter of 2015.
* Segment operating profit for North America was $52 million in the quarter.
This was $1 million higher than fourth quarter of 2015. The business
benefited from further contributions from strategic initiatives.
* Latin America's segment operating profit of $75 million was on par with the
prior year quarter. Strong shipments by the Mexican business more than
offset lower shipments in Brazil and Ecuador related to the challenging
economic situation in those countries. The management team continues to
successfully control costs.
* Asia Pacific reported segment operating profit of $29 million, down $3
million compared with the prior year. This was mainly due to the
aforementioned lower sales volumes and the costs for higher intra-regional
shipments. The region is in a strong position exiting 2016, due to the high
number of furnace rebuilds during the year.

Full Year 2016 Results

Full year net sales were $6.7 billion, up $546 million from 2015. The acquired
business contributed $608 million in incremental sales (excluding organic
growth from September through December 2016) which was partially offset by
$108 million in adverse currency translation. Prices were 1 percent higher on
a global basis, mainly due to price adjustments resulting from cost
inflation. Global shipments increased 9 percent in 2016. Key contributors to
growth were the acquired business, Europe, legacy North America, as well as
Australia and New Zealand.

Shipments in Europe increased nearly 2 percent, primarily due to favorable
beer and wine volumes. In North America, sales volumes improved nearly 7
percent compared to the prior year period, mainly due to the acquired
business, and higher shipments in all major end uses except beer which was on
par with the prior year. Full year shipments for Latin America rose 41
percent, primarily due to the acquired business and growth in Colombia and
Peru which was partially offset by the negative impact of economic weakness
in Brazil and Ecuador. Overall, Asia Pacific shipments declined low single
digits. In mature markets in Asia Pacific, sales volumes increased
approximately 3 percent, primarily due to beer and wine. Sales volumes in
China declined as domestic production was exported to support sales elsewhere
in the region.

Segment operating profit was $882 million in 2016, compared with $740 million
in the prior year, an improvement of 19 percent.

* In Europe, segment operating profit was $237 million, an improvement of $28
million over the prior year period, or 13 percent. The region profited from
higher sales volumes and improvements in operating performance. These
benefits were partially offset by lower average selling prices that were
not fully offset by energy deflation. Europe received an energy credit in
the fourth quarter that had been delayed for legislative reasons since
2015, which essentially offsets the adverse impact of the Brexit vote for
the year.
* North America's segment operating profit increased $34 million, or 13
percent. Approximately 80 percent of the increase was due to the acquired
business. The legacy business also benefited from contributions from
strategic initiatives and from higher sales shipments.
* Segment operating profit in Latin America rose $86 million compared to
prior year, an increase of 47 percent. The acquired business provided an
incremental $94 million of segment operating profit for the region.
Unfavorable currency translation and lower sales volumes in Brazil and
Ecuador negatively impacted Latin America's segment operating profit.
* Asia Pacific reported segment operating profit of $77 million which was $6
million below the ...

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