Amcor has posted an increase in profit in the 2017-18 financial year, announcing its results not long after its move to buy American packaging company 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.
The result shows the strength of the packaging industry, with Ron Delia, CEO Amcor, saying 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 said.
“Looking ahead, we expect constant currency earnings growth in the 2019 financial year and the long-term growth potential of Amcor remains substantial.”
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.
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.
“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,” Delia said.
“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,” Delia said.
