Amcor year-end results: Growth slow, but profits up 7.2 per cent

Amcor's full-year results, released this morning, revealed a slow-down in growth for the company, but record returns of 20.6 per cent and a dividend increase of 23 per cent to 53 AUD cents.

Amcor’s managing director and CEO Ron Delia said the company showed “resilience” and the ability to adapt in a fast-paced world.

“Though growth is lower, change is happening more quickly and we are adapting to our environment and accelerating to meet new opportunities,” he said.

“Customer demands and market growth drove us forward in the past but that won't be enough anymore. We need to bring products to market faster and become more agile and self-sufficient.”

Amcor achieved profit after tax of US$680.3 million, up 0.4 per cent, which includes the negative translation impact from the higher US dollar on profit after tax of US$47 million.

On a constant currency basis, profit after tax was up 7.2 per cent to $726.9 million; earnings per share (EPS) was up 7.5 per cent to 60.4 cents; and free cash flow, after net capital expenditure, was US$298.3 million.

“The key drivers of our increased earnings were the benefits from recent acquisitions and continued improvement in operating performance,” Delia said.

“The business delivered strong free cash flow, after the payment of dividends, of approximately $300 million, and returns exceeded 20 per cent for the first time in the company’s history. The balance sheet remains very strong, and we have completed 60 per cent of the US$500 million share buy-back that was announced in February.”

Over the past 12 months Amcor has announced acquisitions in South Africa, Brazil, China and India, as well as new greenfield plants in the Philippines and Indonesia.

Delia emphasised the importance of the Australian market, which makes up five per cent of its business, in Amcor's operations.

“We have the market-leading flexible packaging business in Australia and New Zealand and the presence we have here is important,” he said.

“Australia holds an important part of our operating business, which will continue to prosper, and it is also our listing location and a great source of equity capital. We don't see any reason to shift the listing of our company anywhere else.”

Delia said growth in Australia was “flat” at about one or two per cent – similar to many other markets around the world – but the flexible packaging arm remained an important, profitable part of the business.

Amcor's flexible packaging segment saw record returns of 25.5 per cent and its operating sales margin increased from 12.1 per cent to 12.5 per cent this financial year.

“The key drivers of this strong performance were growth in emerging markets, product mix improvements, better operating efficiencies and contributions from acquisitions,” he said.

“The rigid plastics business had a strong year, with earnings up eight per cent and returns at a record 20 per cent. There was continued growth in Latin America and the North American operations had a solid result, with higher volumes in all the main product segments.

“Both these business segments delivered solid improvements, and the outlook for the 2015/16 year is for higher earnings, expressed in constant currency terms.

“From here on in, it will be evolution – not revolution – as we capture the opportunities ahead of us.”