Packaging giant Amcor has posted a 21.2 per cent jump in profit, up to $326.6m, on the back of continued growth in fast-expanding emerging markets in developing countries.
The company also credited acquisitions, an improved product mix and reduced operating costs for the huge profit and a 14.5 per cent revenue improvement to $5.2bn, not counting the recently split off Orora Australasian and packaging distribution business.
Amcor’s flexible packaging segment, which makes up around 70 per cent of the business, saw earnings in constant currency terms up by 7.2 per cent. Its sales margin also increased from 11.1 per cent to 11.7 per cent.
The company says the other third of its business, rigid plastics, delivered higher margins and returns, with strong volume growth and earnings.
[Related: More Amcor news]
Amcor chief executive Ken MacKenzie says in the developed world the company has maintained a stable course through the GFC with a market leading position in all four key end market segments: food flexibles, healthcare flexibles, tobacco packaging and rigid plastic containers.
“Sales into these segments represent around 95 per cent of Amcor’s global sales. Amcor is well positioned as a global leader in defensive end markets, with an extensive footprint in emerging markets,” he says.
About a third of the group’s sales are each in North America and Western Europe, but more than 30 per cent are in emerging markets in Asia, South America, Eastern Europe and Africa, which Amcor says are showing faster growth than developed countries.
Flexibles sales in these emerging markets rose more than 10 per cent and now make up around 30 per cent of sales in this area. In China, where Amcor has nine plants, growth reached 18 per cent.
MacKenzie says the company deploys tailored strategies for each region, focusing on its local opportunities rather than trying to lay down identical portfolios across the 43 countries it operates in.
“We are excited about our significant footprint in the fast-growing emerging markets, as this is a platform from which to grow,” he says.
“Over the past four years sales growth in emerging markets has averaged 16 per cent per annum, and earnings growth has averaged 19 per cent per annum.
“Many of our customers have emerging markets as a high priority for growth, and our value proposition is well aligned with our needs and places us in a position to capitalise on its high growth opportunities.”
Amcor says it will not revise its financial expectations for the year, which it posted in August, but continues to forecast higher earnings figures for both the flexibles and rigid plastics segments in the rest of FY2014.
[Related: Blue chip brands]
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at editorial@sprinter.com.au.
Sign up to the Sprinter newsletter
