Amcor profit after tax increased 3.7 per cent on a constant currency basis, reaching USD$329.7m, which was a 15 per cent increase in cash terms, while the profit before interest and tax is up 0.3 per cent 11.4 per cent, reaching USD$513.8m.
Amcor’s sales revenue was up slightly at 0.8 per cent from USD$4.46bn to USD$4.5bn, but it fell 1.7 per cent in constant currency terms.
Within its Flexibles segment, sales revenue increased from USD$3.09bn to USD$3.16bn, up 2.3 per cent in constant currency terms, while Rigid Plastics sales revenue fell slightly from $1.37bn to $1.33bn, down 2.6 per cent in constant currency terms.
Amcor notes its Flexibles Asia Pacific business, which covers 37 plants in eight countries, performed below expectations in the HY.
The company says earnings were lower than the same period last year, reflecting a lag in passing on higher raw materials costs and disappointing cost performance in certain plants. Sales revenue and volumes were higher across Asia, although at rates below long-term trend, and market conditions remain subdued in Australia and New Zealand.
Ron Delia, CEO, Amcor says, “During the half year we have grown earnings, expanded margins and maintained strong returns, with good progress on key investments. Cash flow and the balance sheet remain strong which, along with our confidence in the earnings growth capacity of the businesses, enabled the board to increase the interim dividend by 8 per cent to US$0.21 per share.
“The first half result was in line with the expectations we outlined at our AGM, and demonstrated the resilience and agility of Amcor in the context of short-term industry challenges related to raw material cost increases, weak volumes in one Rigid Plastics segment and mixed conditions in emerging markets.
“The business has responded exceptionally well, focusing on the growth levers that are within our control, implementing pricing actions to recover higher input costs and adapting the cost base and production capacity where volumes have been weaker. Those actions helped underpin the first half result and will continue to provide further support for earnings and margins as these short-term challenges continue into the second half.
“Looking ahead, we expect another year of earnings growth in constant currency terms. We have continued to make progress against our strategic priorities with investments in the Alusa and Sonoco acquisitions and restructuring initiatives in the Flexibles segment, contributing more than USD$30m to PBIT in the current half. Together these investments will deliver more than USD$100m of PBIT growth across the three year period ending FY2020, in addition to organic growth and further M&A.
“The long-term growth potential of Amcor remains substantial. We have a truly global business with a presence in more than 40 countries, unique market leading positions in attractive segments and a strong, differentiated value proposition for customers. This will enable continued strong cash generation, allowing us to take advantage of the significant growth opportunities, both organic and through acquisitions, across all Amcor’s businesses.”
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