Global packaging giant Amcor's 'solid' half year results show profits up and outlook positive for continued growth at a time of "geopolitical uncertainty".
Amcor's statutory profit for the half year ended 31 December 2016 was US$286.6 million (up 3.5%). Amcor’s managing director & CEO Ron Delia said: “The result illustrates the defensiveness and resilience of our unique global packaging business and our strategy."
Earnings growth was balanced across the Flexibles and Rigid Plastics segments, and came from both organic sources and recently acquired businesses. In November last year, Amcor acquired Chinese flexible product manufacturer Hebei Qite Packing in a $36 million deal, adding to its growing footprint in the region.
Delia cites as a strength the company's broad geographic diversification, with a presence in every major region around the world.
"Across our diverse footprint, we saw growth in developed markets this period offsetting challenges in some emerging markets," Delia said.
"The local nature of the packaging industry is particularly important amid rising geopolitical uncertainty. Amcor operates more than 200 plants in over 40 countries and is not reliant on either imports or exports," he said.
“We also took important steps against our strategic priorities, moving quickly with clear alignment through the whole business. In the last seven months we invested in the large scale Alusa and Sonoco acquisitions as well as in the Flexibles restructuring initiatives.
"Relative to the 2016 financial year, these investments will underpin more than US$150 million of PBIT growth over the next three years, in addition to organic growth and further M&A.
“Amcor’s portfolio of businesses service defensive end markets and consistently generate strong cash flows," Delia said.
He pointed to "significant growth opportunities" in segments where Amcor's businesses are "uniquely positioned".
The Flexibles Packaging segment had a solid half year with constant currency earnings growth of 7%. The key drivers of earnings growth in the Flexibles segment were benefits from recently acquired businesses, excellent cost performance, and innovation led sales mix improvements. Margins continued to expand, reaching 12.1% for the half year.
The Rigid Plastics business had an outstanding half year with earnings up 12%.There was strong volume growth in the North American operations, where the market for beverages in PET containers continues to be supported by the long term trend towards resealable packages and smaller pack sizes. Volumes were lower in Latin America, however this was partly offset by favourable product mix.
“Amcor has delivered a solid half year result and the full year expectation for growth in profit after tax remains unchanged. Our business remains very well placed for the current global environment and for the long term," Delia said.
