Amcor raises outlook for FY 2021 as the business remains resilient

Amcor net income in the nine months to March was up 58%

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Amcor: Global packaging company
Amcor: Global packaging company

Global packaging major Amcor has raised the outlook for the financial year ending June 2021 after it reported a net income of $684 million, up 58% year on year in the nine months ending March 2021. 

For the twelve months ending June 30, 2021, the company expects adjusted constant currency EPS growth of approximately 14 to 15% (previously 10 to 14%), compared with adjusted EPS of 64.2 US cents per share in fiscal 2020. 

Amcor’s guidance contemplates a range of factors, including the COVID-19 pandemic, which creates a higher degree of uncertainty and additional complexity when estimating future financial results. However, Amcor said its business had demonstrated resilience, given that it plays a vital role in the supply of essential consumer goods. 

“While this is expected to continue, the level of earnings and free cash flow generated across the business could be impacted by COVID-19 related factors such as the extent and nature of any future operational disruptions across the supply chain, government-imposed restrictions on consumer mobility, and the pace of macroeconomic recovery in key global economies. The ultimate magnitude and duration of the pandemic’s future impact on the business remain uncertain at this time,” it said. 

The strong performance of Amcor in the nine months

The nine months net sales for the Amcor Group of $9,407 million were 2% higher than the same period last year on a comparable, constant currency basis. Overall year-to-date volumes were 2% higher than the same period the previous year.

The flexible business nine months net sales were 1% higher than the prior period, driven by higher volumes. “Year to date segment volume growth of 1% reflects strength across a broad range of end markets, partially offset by an unfavorable impact from lower volumes in certain healthcare end markets driven by fewer elective surgeries and lower prescription trends during the COVID-19 pandemic,” the company said. 

The rigid packaging business nine months net sales were 7% higher than the prior period. Additionally, overall year-to-date volumes were 4% higher than the prior period, with growth in both North America and Latin America, Amcor said.

In North America, year-to-date beverage volumes were 7% higher than the prior period, with hot-fill container volumes up 13%. The company said consumer demand has continued to be strong, particularly in hot-fill juices, hot-fill ready-to-drink tea, and hot-fill sports drinks. 

“Strong consumer demand reflects higher at-home consumption of packaged beverages supported by higher retail sales in multi-pack formats across a range of product categories. Growth was also driven by brand extensions and the introduction of new health and wellness-oriented products in PET containers. Specialty container volumes were also higher than the prior period with growth in certain categories including spirits, personal care, and home cleaning,” it said. 

Bemis cost synergies

Amcor acquired the Bemis flexible packaging business through an all-stock transaction in June 2019. Amcor said it has continued to execute well against overhead, procurement, and footprint initiatives and has delivered approximately $55 million (pre-tax) of incremental cost synergies year to date. Of this amount, approximately $45 million was recognized in the flexibles segment and $10 million in others. 

Amcor expects incremental cost synergy benefits of approximately $70 million (pre-tax) in fiscal 2021, which is unchanged from previous guidance. Combined with the $80 million delivered in fiscal 2020, cumulative cost synergies of approximately $150 million (pre-tax) will result at the end of fiscal 2021 and leaves the business well-positioned to deliver at least $180 million (original target) by the end of fiscal 2022.

 

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

It is the right time to support our high-impact reporting and authoritative and technical information with some of the best correspondents in the industry. Readers can power Packaging South Asia’s balanced industry journalism and help sustain us by subscribing.

– Naresh Khanna

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