Amcor boosts profit by 20 per cent

Amcor has seen its full-year statutory profit after tax rise to US$724m from US$597m, a 21 per cent boost from its 2017 results.

 

Sales revenue for the company also increased, by 2.4 per cent to US$9.3bn from US$9.1bn.

 

Statutory profit before tax came to US$880m for the FY, from US$765m in the previous corresponding period.

 

Amcor will pay a final dividend of 32.65c, which is 9.4 per cent higher than what was paid last year.

 

Split by segment, Amcor saw growth in the Flexibles sales revenue, from US$6.2bn to US$6.5bn, while its Rigid Plastics sales revenue fell from US$2.8bn to US$2.7bn.

 

Narrowing down to the Asia Pacific, Amcor notes that its Flexibles earnings were lower than the same period last year in constant currency terms, reflecting the time lag in raw material costs, along with disappointing cost performance in certain plants.

 

A spokesperson says, “Market conditions in Australian and New Zealand remained subdued and operating costs were higher.”

 

In Rigid Plastics, profit before income tax fell by 8.9 per cent, from US$342.7m to US$312m. Amcor says it expects the segment to deliver growth in the 2018/19 financial year, taking into account the net benefits of acquisitions, and restructuring initiatives.

 

Ron Delia, CEO, Amcor, says, “We are encouraged by early indications that the short-term challenges our industry has experience have started to stabilise as we head into the 2019 financial year. Volumes in the North American beverage segment have modestly improved, earnings headwinds in some regions have started to slow as higher raw material costs are passed through and emerging markets organic growth improved in the second half to four per cent.

 

“Earnings for the 2018 financial year were in line with the prior period in constant currency terms. The business continued to implement pricing actions to recover higher input costs in the Flexible Packaging segment and to adapt the cost base to reflect lower volumes in some parts of the business. We continued to make good progress against investments in the Alusa and Sonoco acquisitions and the restructuring initiatives in the Flexibles segment. Amcor continued to generate strong margins and cash flow which, along with confidence in the earnings growth capacity of the business, enabled the board to increase the full year dividend by five per cent to 45 US cents per share.

 

“During the year, Amcor also made strong progress against the strategic priorities that will drive earnings growth going forward. Long-term supply agreements were completed with several multinational customers, reinforcing the value of our global footprint and value proposition, and commissioning of new plants commenced in India and Mexico. In January, Amcor became the first global packaging company pledging to develop all our packaging to be recyclable or reusable by 2025. To support this pledge, we established a Sustainability Centre of Excellence in Europe to advance the related research and development across our global flexible packaging business.

 

“Earlier this month, we announced an agreement to acquire Bemis Company Inc in an all-stock combination at a fixed exchange ratio. Through this transaction, Amcor will enhance its access to attractive products and segments with robust long-term growth fundamentals including high barrier films and meat and protein packaging. By combining the complementary commercial, operational and innovation capabilities that Amcor and Bemis each bring, there is an exceptional opportunity to deliver an industry leading value proposition to our customers, employees and the environment. For investors, the transaction creates substantial value through higher earnings per share, strong returns, increased cash flow and the greater liquidity expected from the additional listing on the NYSE. We look forward to welcoming our new Bemis colleagues and customers into Amcor during the 2019 financial year.

 

“Looking ahead, we expect constant currency earnings growth in the 2019 financial year and the long-term growth potential of Amcor remains substantial.”

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