Strong volume growth in emerging markets and a solid position in the defensive market segments of food, beverage and healthcare are key factors in Amcor's continued delivery of higher underlying profits, returns and dividends.
For its first half of 2012/13 Amcor has posted profit after tax and before significant items of $322 million, up 5.7 per cent, taking into account the translation impact of $20 million from the higher Australian dollar.
Significant items after tax, relating to the closure of the company's Queensland cartonboard plant, amounted to $83.7 million, with the net profit after tax and significant items reported as $238.3 million.
Announcing Amcor's results to the market on 18 February, Amcor MD and CEO Ken MacKenzie said:
“Earnings per share before significant items increased 7.2% to 26.7 cents per share and the dividend increased 8.3 per cent to 19.5 cents per share.
“The high Australian dollar meant that the translation of overseas earnings into Australian dollars, for reporting purposes, had an adverse impact on profit after tax of $20 million. On a constant currency basis, earnings per share increased by 14.1 per cent.
“The result again highlights the defensive nature of our businesses. Volumes across a number of the key market segments in developed countries continued to be stable and there was strong volume growth in emerging markets.”
MacKenzie said that over 85 per cent of Amcor's business serviced the defensive end-market segments of food, beverage and healthcare.
He said Amcor is well positioned to deliver continued earnings growth.
“This growth is underpinned by the benefits from the new recycled paper mill at Botany, further acquisitions and our focus on innovation and emerging markets.”
MacKenzie pointed to the recent announcement, on 15 February, of Amcor's acquisition of AGI-Shorewood's tobacco packaging operations that would expand the company's position in the Asian and Mexican markets and improve its cost position in the US market.
“In emerging markets, Amcor continues to support our customer’s growth. These regions represent more than 20 per cent of our sales and have delivered strong growth in earnings and returns over an extended period,” he said.
“All these growth initiatives are underpinned by a strong and growing cash flow.”
Commenting on business segment performance, MacKenzie said: “The flexible packaging segment had a strong result with profit up 14.3 per cent and returns at 23.0 per cent. The business benefited from continued volume growth in emerging markets and the successful integration of the Aperio and Aluprint acquisitions.
“The rigid plastics group achieved a 9.5 per cent increase in earnings. The highlight was strong profit growth in the diversified products business as it continues to reposition itself in the higher value-add product segments.
“The Australasian and Packaging Distribution business achieved a solid result. After experiencing a slow first quarter, volumes were stronger in the second quarter.
MacKenzie said the start-up of the new recycled paper mill at Botany in NSW, which commenced commissioning in October, has proceeded well. It's expected to deliver $50 million in PBIT benefits over the next two years.
He said the mill will allow Amcor to bring to the Australian market a higher quality of recycled paper for the corrugated box market, lighter in weight and achieving better print quality than previously possible.
“This is an exciting time for Amcor. The outlook for the current year remains unchanged from the full year results in August. It is expected Amcor will deliver another year of higher underlying profits in the current year,” MacKenzie said.
