In a major shake-up of Australia's largest multinational packaging giant, Amcor has announced it is to spin-off its local metal canning, glass bottling and fibreboard business, together with its Australasian and North American packaging distribution assets, into a separate entity, Amcor Australasia and Packaging Distribution (AAPD).
Amcor chief executive Ken Mackenzie said the move would leave the core Amcor business free to focus on its global plastics and flexibles business, while the new company will be a regionally focused company, with two thirds of its business in Australia and New Zealand, and a third in North America.
"Although Amcor and AAPD are both packaging companies they are actually very different in terms of product segments and geographic focus," Mackenzie told a media briefing to explain the demerger.
He said the decision to split the company followed an eight-year period of transformation, during which the AAPD segment had been rationalised to focus on four core business areas: fibre, glass and metal packaging and packaging distribution.
He said the Australasian and North American operations that will make up AAPD had long operated within their own business division within Amcor.
“They are a good fit as they operate in the same segments,” he said. “Both Australasia and North America do distribution and they also both manufacture corrugated boxes. They logically fit together.”
The remaining Amcor company will have 95 per cent of its business outside Australia and New Zealand, with about 30 per cent of that in high-growth developing markets, particularly in Asia and Latin America. Its chief activities will be in the flexible and rigid plastics packaging segment and tobacco packaging.
AAPD will be headed up by current Amcor president, Nigel Garrard, who will act as chief executive. Garrard has acted as managing director of Amcor Australasia since 2009. Mackenzie will retain his existing role heading the global Amcor company.
Mackenzie said the demerger would allow AAPD to be a much more focused operation, and was in a strong position to achieve sustained solid growth.
He pointed, for example, to investments of more than $1 billion in AAPD assets in recent years, including its $500,000 B9 recycled paper mill in Sydney, a third glass furnace in South Australia serving both wine and beer industry customers, and the establishment of an additional metal can line in New Zealand.
“Despite the significant challenge faced by local manufacturing in recent times, due in part to the strong Australian dollar, our earnings have remained strong and broadly consistent – I am extremely proud of that,” Mackenzie said.
While Mackenzie declined to estimate the value of the AAPD business ahead of the release of its financial results later this month, it achieved revenue of $2.87 billion last year.
The plan is subject to shareholder approval, but is expected to be completed by December this year. Both entities will then be listed on the Australian Stock Exchange (ASX).
“I want to remain clear we will remain listed on the ASX, the majority of our shareholders are Australian based, and the majority of the board will be Australian,” Mackenzie said.
“The corporate offices for both will remain in Australia, and more particularly Melbourne.”
Mackenzie also dismissed suggestions the demerger was in any way prompted by a desire to sell-off the AAPD business.
“We have not tried to sell off the business and there is no offer on the table,” he said. “The reason we are doing it now is it is the right time.”
Ken Mackenzie: Following Amcor's demerger, the new AAPD company will focus on fibre, glass and metal packaging in Australia and New Zealand, and packaging distribution in Australasia and North America.
