Amcor CEO signals strong investment ahead

Amcor CEO Ron Delia says the company is going to be investing strongly in growth opportunities over the coming period, targeting high growth segments, major emerging markets, and innovation.

Delia also said the company’s sustainability journey was well underway, with 95 per cent of rigids, 100 per cent of cartons and 76 per cent of flexibles currently recyclable. The company is now setting new targets on greenhouse gas emissions on its pathway to net zero by 2050.

Speaking to investors on the company’s half year results, Delia said healthcare, proteins, pet food, premium coffee and hot fill beverages were the segments that the company has identified as its major growth segments that it would be investing in strongly. He said India, China and Brazil were the biggest of 27 emerging markets it is targeting.

When it comes to acquisitions, Delia said the company had been “laser focused” on bedding down the Bemis acquisition for the past two and half years, but said that period was now behind it, and Amcor was now actively looking for acquisitions, but would not pay inflated asset values, and said any future acquisitions had to be in line with strategic vision and not just “bolt-on for size”.

Amcor achieved strong revenue growth in the first half, with sales revenue up by 12 per cent to US$6.9bn, split between two per cent organic sales growth and 10 per cent from the US$650m price increases the company made. On a constant currency basis though, this represented a two per cent rise. Its EBITDA was up by three per cent, or four per cent on constant currency basis, to US$976m.

Delia said, “Amcor delivered a solid first half result as our teams continue to successfully navigate a persistently challenging and dynamic operating environment.

“We implemented a broad range of actions to recover higher input costs and manage through general inflation. As a result sales grew by 12 per cent, we delivered nine per cent adjusted earnings per share growth to date. We remain confident in the outlook for 2022.”

Flexibles sales revenue grew by 10 per cent to US$5.35bn from US$4.85bn, with rigid sales up 17 per cent to US$1.58bn from US$1.35bn. Flexibles EBIT was up by six per cent to US$691m, with Rigid adjusted EBIT down by 13 per cent to US$117m, which Delia attributed to supply chain issues and raw material constraints in North America. Delia said he expects profit growth in the second half of the year, thanks to strengthening demand, added capacity, and the amount of inventory Amcor is holding.

Delia said the company would meet the trend to fibre-based packaging with its own innovation, which he said was well underway, pointing to several products that Amcor had already brought to market, and said it was working on further solutions.

He also highlighted the company’s improving safety record, saying that there had been a 10 per cent reduction in injuries in the year, and that 58 per cent of sites were completely injury free, a new record.