Amcor milestone as profits hit US$1bn

The world’s biggest packaging company Amcor hit a major milestone, with reported a net profit for FY2020 reaching US$1bn for the first time, with an 11 per cent increase on the previous year (on a constant currency basis).

Flexibles accounted for most of Amcor’s revenues in the 2020 financial year, bringing in US$9.755bn in net sales. The full year net sales for the flexibles segment were down just shy of 1 per cent compared to FY 2019. The company said the decrease was due to “unfavourable impact from the pass through of lower raw material costs”. Flexibles volumes were 0.1 per cent higher than the prior financial year.

Rigid packaging brought in US$2.716bn over the period. Rigid packaging net sales were 4.8 per cent lower than the prior financial year (in constant currency terms).

Ron Delia, CEO at Amcor said, “Profit and cash flow were significantly higher than last year and supported continued capital investment, an increase in our dividend and the repurchase of 3.5 per cent of shares outstanding.

“Despite managing through significant change and complexity, our business continued to demonstrate financial and operational resilience and the execution of our teams was outstanding.”

The company said it has operated its plants around the world with “minimal” disruption during the Covid-19 pandemic. It reported that, for the six months to 30 June, volumes of both flexible and rigid packaging were up 1 per cent than the same period last year.

The company said the extent to which the global pandemic has influenced overall demand for Amcor's products in each region has been mixed, as certain end markets in each geographic area appear to have benefited at varying times while others have been constrained.

It said there was good demand for healthcare packaging globally through the period, and most food and beverage end-markets have generally remained more resilient in the developed world than in emerging markets, and more resilient in at-home consumption channels than in convenience and away-from-home channels.

Amcor said integration of the Bemis business in the US, which it acquired in June last year, was moving faster than expected. The company reported about US$80m (pre tax) of cost synergies during the year, which was in line with guidance issued in May, and well ahead of the US$65m expected at the start of the financial year.

Delia said cost synergies almost 30 per cent higher than original expectations and performance across the combined flexibles packaging business building momentum.

“We expect that momentum to continue to build as we leverage the broader geographic diversification, increased scale and capabilities that result from the acquisition,” he said.

Delia said for fiscal 2021, the company expects free cash flow of more than $1bn, and earnings-per-share growth of 5-10 per cent driven by continued organic growth from defensive consumer end markets, additional cost synergies and a lower share count resulting from shares already repurchased.

“We remain focused on protecting our co-workers, meeting the needs of our customers and continuing to develop responsible packaging which is even better for the environment,” he said.

“While uncertainties remain, we are confident in the resilience and potential of the business to help meet the growing need for product safety, hygiene, shelf life and convenience."