Amcor has announced full year profits that, after tax and before significant items, were up two per cent to $387m. The final dividend increased from 15 to 16 cents per share, giving a full year dividend of 32 cents per share, up 6.7 per cent on the previous year. The company continues to generate strong operating cash flow, which for the 2003/2004 year, was $891m. Russell Jones, Amcor managing director, says, "Operationally the profit after tax was up around 11 per cent expressed in constant currency terms, however when the impact of translating the overseas earnings back into higher Australian dollars is taken into account earnings were up two per cent.
"Return on funds invested for the year remained steady at 11.1 per cent which, although above
our cost of capital, is not consistent with the improvements targeted. After nearly six years of reshaping and building the organisation, the next two years will be focused on optimising returns off the existing asset base. We expect the programmes we have in place to assist in growing earnings by around 20 per cent over this period."
As previously announced in April, Amcor is pushing forward with an extensive rationalisation and restructuring plan in both the PET and Flexibles operations, as part of the ongoing review of the cost base of all the businesses. This will involve the closure of eight facilities and a combined headcount reduction of 900 people.
The cost of this programme is anticipated to be $160m with benefits of around $65m per annum. All plant closures and restructuring will be completed over the next six
months ensuring that close to 50 per cent of the benefits are achieved this year with the balance in the 2005/2006 year. The cost of this programme will be spread over two years with $90m incurred this year.
"Over the past three years there has been considerable progress in the development of new products and innovative packaging solutions. The ongoing success in this area is a key enabler of building relationships with our major customers and remains a primary driver in improving returns," says Jones.
"This is an important period of growth for the company as the benefits are realised from building strong positions in our chosen markets. The strategy of being an industry consolidator focusing on specific sectors has delivered businesses with the size and strength in their respective markets to leverage scale, technology and customer relationships to further improve earnings and returns. Having built these market leading positions, it is no longer a strategic imperative to add further scale and for the next two years no large acquisitions will be contemplated."
According to Jones, his vision has been, and remains, to build a company that is focussed on the growth segments within the more defensive food and beverage packaging markets that can deliver strong cash flows, consistent earnings growth and superior returns.
"After six years of considerable change and development that have delivered earnings growth and improving returns, the company is well placed to build on this position," says Jones.
