The Segment considers customers’ demand levels, particularly in North America and Western Europe, to be reasonably mature and, as such, will continue to focus its expansion plans on innovative and higher growth product lines within those geographies with a view to improving overall profitability. In Asia, Latin America and other emerging markets a higher level of economic growth is expected over the coming years, and this should provide opportunities for the Segment to improve market share and increase profitability in these regions. The Segment produces labels predominantly from polyolefin films and paper sourced from extruding, coating and laminating companies, using raw materials primarily from the petrochemical and paper industries. CCL Label is generally able to mitigate the cost volatility of these components due to a combination of purchasing leverage, agreements with suppliers and its ability to pass on these cost increases to customers. In the label industry, price changes regularly occur as specifications are constantly changed by the marketers and, as a result, the selling price for these labels is updated, reflecting current market costs and new shapes and designs. There is a close alignment in label demand to consumer demand for non-durable goods. Management believes the Company will attain the sales volumes and geographic distribution and reach mirroring those of its customers over the next few years through its focused strategy and by capitalizing on the following customer trends. CCL Label’s global customers are requiring more of their suppliers, expecting a full range of product offerings in more geographic regions; are requiring more integration into their supply-chain at a global level and are concerned with the integrity of their products and the protection of their brands, particularly in markets where counterfeit products are an issue. These issues put many of CCL’s competitors at a disadvantage, as do the investment hurdles in converting equipment and technologies to deliver products, services and innovations. Trusted and reliable suppliers are important considerations for global consumer product companies and major pharmaceutical companies. This is even more important in an uncertain economic environment when many smaller competitors encounter difficulties and customers want to ensure their suppliers are financially viable. Sales in the Label Segment for 2011 increased to $1,012.3 million, compared to $955.1 million in 2010. Foreign currency translation had an unfavourable impact of 1.0%. Excluding foreign currency translation, sales for the Label Segment increased 7.0% primarily due to strong organic growth and the 1.0% positive benefit from the Sertech acquisition. North American sales for 2011 increased low single digits, excluding currency translation compared to 2010. Sales for the Home & Personal Care business were flat for the year but improved with the economy in the second half and particularly in the fourth quarter, after a soft start to 2011. Sales in the Healthcare business improved compared to 2010 due to the U.S. FDA quarantine initiated in the third quarter of 2009 at a major customer being lifted in the first quarter of 2011, incremental revenues from the acquisition of Sertech and stable demand generally in the market. Sales for the Specialty business were up compared to 2010 reflecting solid performance from the promotions sector and despite a difficult year for some customers in the Agricultural Chemicals sector attributed to abnormal weather patterns in 2011. Sales in the small Sleeve and Battery businesses declined in 2011 due to competitive pressures. Due to this mix in performance, operating income for 2011 in the North American label operations was down very slightly after the negative impact of foreign currency translation. European sales increased mid-single digits despite a challenging economic environment. Although internal profit targets were exceeded for the year, operating income declined in 2011 compared to the strong recovery in 2010. Sales increased in the Home & Personal Care, Healthcare & Specialty, Sleeves, Beverage and Durables sectors on customer design and branding initiatives, market share wins and stable demand in the countries where CCL operates. However, continuing losses at one of our French operations negatively affected the Home & Personal Care sector and challenges to pass on commodity cost increases, particularly in the Stretch Sleeve and Battery product lines, more than offset modest improvements in other parts of the region. A restructuring of the problematic French plant is underway and is expected to deliver improved results in 2012. The Latin America Label operations continued to deliver strong double-digit sales growth and improved operating income despite the impact on raw material costs of the Mexican peso devaluation relative to the U.S. dollar in the second half of 2011. Sales in the Home & Personal Care sector in both Brazil and Mexico increased due to further penetration of CCL’s global customer base in the CCL Industries Inc. 2011 Annual Report 19 Label Segment Financial Performance 2011 % Growth 2010 Sales $ 1,012.3 6% $ 955.1 Operating income $ 142.5 — $ 142.3 Return on sales 14.1% 14.9%