Packaging giant Amcor is sailing on solid revenues from its consumer staples and footprint in emerging markets, which saw its profits for the first half of 2013/14 reach $326.6m, up from the previous year’s $269.4m. Acquisitions, growth in emerging markets, an improved product mix and reduced operating costs contributed to the 21.2 per cent rise in earnings – the figures discount the recently demerged Orora Australasian and packaging distribution business.
Ken MacKenzie, managing director
and CEO of Amcor
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. Amcor says key drivers for the results include acquisitions, commercialised product innovations and an ongoing focus on improving costs and operating efficiencies. The rigid plastics sector, accounting for 30 per cent of the total Amcor pie, is said to have delivered higher margins and returns, with strong volume growth and earnings. In the developed world Amcor says it 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. Ken MacKenzie, managing director and CEO of Amcor, says, “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.” Roughly one-third of the group’s sales are each in North America and Western Europe, but more than 30 per cent centre on emerging markets in Asia, South America, Eastern Europe and Africa; which Amcor says are showing faster growth than developed countries. In the flexibles sector, for instance, emerging markets, which make up around 30 per cent of flexibles sales, saw more than 10 per cent growth. 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. He says, “We are excited about our significant footprint in the fast-growing emerging markets, as this is a platform from which to grow. 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 2013/14.
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