Posts Tagged ‘Amcor’

  • Amcor profits head towards $1bn

    Amcor has posted an increase in profit in the 2017-18 financial year, announcing its results not long after its move to buy American packager Bemis.

    Profit after tax was $985m (US$724m), up from $954.1m (US$701.2m) in 2016-17. Sales revenue for the company rose by 2.4 per cent to $12.65bn from $12.37bn, although on  a constant currency basis the sales figure slipped by 0.6 per cent.

    Amcor’s PBITDA was down by 0.4 per cent, or 3.5 per cent in constant currency terms to $1.96bn, while statutory profit after tax was up by 21.3 per cent to $985m.

    Amcor saw growth in the Flexibles sales revenue, from $8.3bn to $8.84bn, while its Rigid Plastics sales revenue slipped, down from $3.8bn to $3.67bn.

    In the Asia Pacific, Amcor’s Flexibles earnings were lower than the same period last year in constant currency terms, reflecting say the company the time lag in raw material costs, along with disappointing cost performance in certain plants.

    Amcor says market conditions in Australian and New Zealand remained subdued and operating costs are moving higher. In Rigid Plastics, profit before income tax fell by 8.9 per cent to $424m.

    Amcor CEO Ron Delia

    Ron Delia, CEO Amcor, said that headwinds in earnings from higher raw material costs are starting to slow. “We are encouraged by early indications that the short-term challenges our industry has experienced have started to stabilise as we head into the 2019 financial year,” he says.

    “Looking ahead, we expect constant currency earnings growth in the 2019 financial year and the long-term growth potential of Amcor remains substantial.

    “The business continued to implement pricing actions to recover higher input costs in the Flexible Packaging segment and to adapt the cost base to reflect lower volumes in some parts of the business. We continued to make good progress against investments in the Alusa and Sonoco acquisitions and the restructuring initiatives in the flexibles segment.”

    Earlier this month, Amcor announced plans to expand its footprint in the North American market by purchasing US-based packaging company Bemis. According to Delia, the company is looking forward to welcoming Bemis colleagues and customers into Amcor in the 2018-19 financial year.

    “By combining the complementary commercial, operational and innovation capabilities that Amcor and Bemis each bring, there is an exceptional opportunity to deliver an industry leading value proposition to our customers, employees and the environment,” he said.

    Sustainability was also a focus for Amcor this year, as it became in January the first global packaging company to promise a switch to entirely recyclable or reusable packaging by 2025.

    “To support this pledge, we established a Sustainability Centre of Excellence in Europe to advance the related research and development across our global flexible packaging business,” said Delia.

  • Amcor packs its bags for Jersey tax haven

    Australian packaging giant Amcor is buying US flexible packaging leader Bemis for $US6.8 billion ($A9.2 billion) before listing on the New York Stock Exchange (NYSE). A combined holding company, New Amcor, will be incorporated in Jersey.

    “Combining these two complementary companies will create the global leader in consumer packaging, with the footprint, scale and capabilities to drive significant value for shareholders,” Amcor told the ASX in a statement.

    ‘The financial benefits are highly compelling’: Amcor CEO Ron Delia.

    Amcor and Bemis will be combined into a newly created holding company called New Amcor and be incorporated in Jersey – a self-governing dependency of the UK located in the Channel Islands that was identified by the EU last year as one of 17 global tax havens.

    “It is intended that New Amcor will be tax resident in the UK after closing,” the company said. “New Amcor will have a primary listing on the NYSE and a listing on the ASX.”

    Amcor will still trade on the ASX but only through Chess Depositary Interests – a type of security used by the ASX to allow international companies to trade on the local market. Australian shareholders will have the option of holding shares in the NYSE listing or via a secondary listing in the ASX through Chess Depositary Interests.

    The deal, subject to approval by regulators and both sets of the shareholders, would see Amcor issue 5.1 of its shares for each Bemis share. Bemis shareholders will end up with 29 per cent of the combined company and Amcor shareholders will have 71 per cent.

    “We will establish a listing on the NYSE with a market capitalization of about $US17 billion,” said Amcor CEO Ron Delia. “The strategic rationale for this combination and the financial benefits are highly compelling for both Amcor and Bemis shareholders. We are convinced this is the right deal at the right time for both companies, and with the right structure for both sets of shareholders to participate in a unique value creation opportunity. Amcor identified flexible packaging in the Americas as a key growth priority and this transaction delivers a step change in that region.

    “There are an increasing number of opportunities arising for a leading packaging company to capitalize on shifting consumer needs, an evolving customer landscape and the need to provide responsible packaging solutions that protect the environment. With this transaction, Amcor will have a stronger value proposition with the scale, breadth and resources to unlock value from these opportunities, for the benefit of our shareholders, customers and employees.”

    Amcor, which transferred its global headquarters from Melbourne to Zurich in 2015, is a global leader in packaging solutions, supplying a range of rigid and flexible packaging products into the food, beverage, healthcare, personal care and other fast moving consumer end markets. Amcor operates around 195 sites in over 40 countries, with approximately 35,000 employees. For the year ended 30 June 2017, Amcor generated revenues of US$9.1 billion and EBITDA of US$1.4 billion.

    Bemis Company is a supplier of flexible and rigid plastic packaging used by leading food, consumer products, healthcare, and other companies worldwide. It has 56 packaging plants in the US and 11 other countries. Founded in 1858, Bemis reported 2017 net sales of US$4.0 billion. Bemis has a strong technical base in polymer chemistry, film extrusion, coating and laminating, printing, and converting. Headquartered in Neenah, Wisconsin, Bemis employs approximately 16,000 people worldwide.

    The combined businesses will have a total revenue of $US13 billion.

    The new company’s global flexible packaging footprint.

    “The combination of Bemis and Amcor is transformational, bringing together two highly complementary organizations to create a global leader in consumer packaging,” said Bemis president and CEO, William F. Austen. “We believe this combination, which is an exciting growth story for both companies, will benefit all stakeholders.”

    Amcor chairman Graeme Liebelt will remain as chairman of the ‘New Amcor,’ with the enlarged board to include eight current Amcor directors and three directors from Bemis.

  • Aussie dollar turnaround casts doubt on Amcor mill closure – Pulp & Paper Edge report

    As local packaging giant, Amcor, enters the end game for its Petrie recycled coated cartonboard mill in Queensland, one of the factors that impacted the site’s profitability – the strength of the Australian dollar – is looking at a turnaround, casting doubt on the rationale behind the closure, Pulp & Paper Edge reports.

    In February, Amcor said it would cut around 160 jobs with the closure of its Petrie recycled paperboard mill in Queensland, following the facility’s struggle to cover it’s own operational costs amid falling earnings and international competition in the sector.

    In its half-yearly financial report, published on 18 February, the packaging giant said it would close the Queensland plant (pictured) by the end of December this year.

    According to the latest issue of Pulp & Paper Edge – published by Industry Edge – the irony of the closure, which was driven in part by the sustained high value of the Australian dollar, is the decline in the exchange rate since the closure announcement was made. By the time Petrie closes permanently at the end of the year, it is expected the Australian dollar will have further devalued. 

    IndustryEdge has long considered that at A$1.00 to US$0.80, or thereabouts, the Petrie Mill and Amcor’s supply of coated cartonboard from it would be a profitable business. Whether the Australian dollar will depreciate that far by the end of the year remains to be seen.

    After production ceases, the mill will continue to convert and finish its cartonboard stocks before they are delivered to fulfill final customer orders. The full closure of Petrie is not expected until the end of 2013, when final supplies are due to be delivered.

    Customers with whom IndustryEdge has contact, continue to sing the praises of Amcor’s team for the professionalism of their delivery and the quality of their products and service.

    Some customers have suggested they are already finding managing relationships and issues with new suppliers far more challenging, especially as the importers are viewed as having ‘less skin in the domestic game’ than Amcor had.

    As the chart (pictured above right) shows, Australia has a long history of coated cartonboard imports filling a domestic supply gap.

    While imports have played their part to date, it is domestic supply that has supported some of the largest and most brand dependent businesses in Australia. This seems to apply especially to those involved in food supply businesses where quality, hygiene and consumer safety considerations are interwoven with brand and identity.

    Buyer concern has turned to the relatively small size of the Australian market and the potential for importers of cartonboard to move in and out of the market as conditions change.

    The major supply nation continues to be New Zealand, with shipments coming from the Reynolds Group’s Whakatane Mill (formerly owned by Carter Holt Harvey). The USA and Korea both have solid supply positions, but in different sub-grades with an emphasis on different end-uses.

    These long term and consistent suppliers are considered stable and reliable. It is new entrants about whom most sleep is being lost and in respect of whom greatest assistance is being sought.

    This month sees Pulp & Paper Edge celebrate its 100th issue, and features an in-depth interview with IndustryEdge founder, Robert Eastman and former AusNewz publisher, Brian Stafford.

  • Amcor offloads Melbourne mill for $120m

    Local packaging giant, Amcor, is bolstering its footing in the Chinese packaging market while lightening its load in Australia, with the company acquiring the packaging operations of China’s Jiangsu Shenda Group and selling off its Fairfield paper mill in Melbourne.

    The Australian-listed packaging company revealed both deals to shareholders on 1 July, saying that the acquisition of the Chinese flexible packaging operations will enable Amcor to become the market leader in flexible packaging in Eastern China.

    Ken MacKenzie (picture), Amcor’s managing director and CEO, said the ¥350 million (AU$62.4 million) acquisition reflects the strong growth in China’s packaging market.

    “Continued strong growth in consumer spending makes China one of the most attractive markets globally,” said MacKenzie. “Amcor has a strong and successful position in the Chinese flexible packaging market with nine plants, covering all the key regions and sales of over AU$400 million.

    “This acquisition establishes Amcor as the market leader in Eastern China, a region that represents approximately 40 per cent of China’s GDP. The business is a strong fit with our existing operations and offers considerable synergy opportunities,” he said.

    According to Amcor, the acquired business has sales of approximately ¥440 million ($78.5 million), with expected returns – measured as earnings before interest, tax, depreciation and amortisation (EBITDA) – of over 20 per cent by financial year 2016.

    The deal complements Amcor’s existing plant in the Eastern Chinese Jiangsu province, with two new manufacturing sites in the province, with two-thirds of the acquired business’s sales to the pharmaceutical, snacks and culinary markets.

    Closer to home, Amcor is selling its Fairfield paper mill property in Melbourne for a consideration of $120 million, with proceeds to be paid over a fur year period. Amcor is receiving a $10 million deposit on exchange of contracts, with the profit on sale is anticipated to be approximately $60 million.

    The Fairfield site is being bought by a consortium led by Alpha Partners, and a company associated with Glenvill Group, a Melbourne-based developer.

    In February, Amcor said it would cut around 160 jobs with the closure of its Petrie recycled paperboard mill in Queensland, following the facility’s struggle to cover it’s own operational costs amid falling earnings and international competition in the sector.

    In its half-yearly financial report, published on 18 February, the packaging giant said it would close the Queensland plant (pictured) by the end of December this year.

    Amcor’s Australasia and Packaging Distribution division, which oversees the Petrie plant, recorded a 7.8 per cent drop, recording a profit before interest and tax (PBIT) of $82 million, just a few million shy of the previous year’s result of (AU)$89.8 million for the same period

    Amcor’s sales revenue for the six-month period was down slightly by $50.4 million, or 0.8 per cent to just over $6 billion.