Sales at the world’s biggest packaging business Amcor fell by seven per cent in the third quarter, but EBIT rose on the basis of what the company says was a strong cost performance, and the benefits of its restructuring initiatives.
Net sales of US$3.4bn for the quarter, the first reported since CEO Ron Delia stepped down, comprised US$2.6bn from flexibles, also seven per cent lower, and US$813m from rigid packaging, which was eight per cent down on the same period last year.
It was falling volumes of higher value healthcare products that torpedoed flexibles, as post-Covid destocking continued, and consumer demand softened further. However, the company did see flexibles growth in several key markets including China, India, Brazil and Thailand for its meat, cheese and petcare packaging. EBIT in flexibles of US$358 was five per cent higher than last year.
Rigids took a hit from plummeting US demand for hot fill beverage containers, which saw volumes drop by 18 per cent over the same quarter last year, contributing to an 11 per cent decline in overall rigids volumes. Adjusted EBIT of US$71m was one per cent higher than the same quarter last year.
In the year to date for Amcor, net sales of US$10.1bn were eight per cent lower than last year on a reported basis, including a favourable impact of two per cent related to movements in foreign exchange rates, an unfavourable impact of one per cent related to items affecting comparability, and an unfavourable impact of one per cent related to the pass through of lower raw material costs of approximately US$145m. Net sales on a comparable constant currency basis were seven per cent lower than last year, mainly reflecting approximately seven per cent lower volumes. Adjusted EBIT of US$1.1bn was three per cent lower than last year on a comparable constant currency basis, reflecting lower volumes partly offset by strong cost performance.
Amcor interim CEO Peter Konieczny said, “While overall March quarter volumes were lower than last year, our volume performance was better than anticipated and substantially improved on the previous quarter, with growth delivered across several categories and geographies.
“A combination of sequential volume improvement, the realisation of benefits from structural cost initiatives, and maintaining our focus on flexing the cost base, resulted in year over year growth in adjusted EBIT for the quarter. We expect our momentum will continue to build.”
