Packaging giant Amcor recorded an 11 per cent increase in profit after tax for the year end June 30, compared to the previous year, on sales which slipped by 1.8 per cent to $12.2bn.
It posted a profit after tax before significant items of $634.9m, up by 11.3 per cent, its profit after tax and significant items of $412.6m, up 15.7 per cent. Its earnings per share before significant items was 52.3c, up by 12.5 per cent.
Ken MacKenzie, managing director and CEO, Amcor says, “The full year result represented a record underlying profit, record returns and a record dividend for the company. To achieve an 11.3 per cent increase in underlying earnings was an outstanding effort by our co-workers, given subdued economic conditions, and a $35m adverse impact on reported earnings due to the appreciation of the Australian dollar.”
The Australian division saw a 1.3 per cent growth in sales revenue in comparison to last year, rising to $2.87bn, roughly a quarter of the company’s revenue. However profit before interest and tax (PBIT) dropped by 4.5 per cent to $152.5m.
MacKenzie says “During the global financial crisis the business undertook two transformational acquisitions, purchasing Alcan Packaging and Ball Plastic Packaging. The integration programs for both acquisitions are ahead of schedule in terms of timing and total synergy benefits. These improvements have been a key component of earnings growth for the year,”
The aggregate benefits to shareholders from these acquisitions are evident in the returns achieved over the past three years. Since July 2009 Amcor has delivered an aggregate total return to shareholders of 101 per cent, comprising 72 per cent in price appreciation and 29 per cent in cash dividends. This has been an outstanding outcome and underscores the transformational nature of these acquisitions.
Commenting on the business segment performance MacKenzie says, “The Flexibles business had an excellent year with earnings up 16.9 per cent and returns of 23.9 per cent. Sales were 2.3 per cent higher with generally stable volumes in the developed countries and continued growth in emerging markets, particularly Asia.
“The Rigid Plastics business had a strong year with earnings 13.4 per cent higher and returns of 15.5 per cent. This substantial improvement was driven predominately by the benefits of the successful integration of the Ball Plastic Packaging acquisition.
“The Australasia and Packaging Distribution business achieved underlying earnings in line with last year. This was a solid performance given difficult economic conditions in the second half of the year in Australia.
“Over the past seven years Amcor has been on a journey that has involved developing and embedding a proprietary operating model, The Amcor Way, and focusing the business portfolio on those areas where we have a long-term competitive advantage.
“We are now in a position to move to the next phase of development where the significantly increased cash flow can be utilised to further enhance shareholder value.
“During the 2011/12 year our strong cash flow was allocated to new capital investment of $400m, five acquisitions totalling $350m, $265m for the new paper recycling mill and a 6 per cent increase in the dividend. We also undertook a $150m share buy-back.”
“Amcor has over 85 per cent of its sales in the defensive end market segments of food, beverage and healthcare packaging. Consumer demand in these segments was particularly stable during the global financial crisis in 2009 and this stability has continued over the ensuing three years. Growth in emerging markets continues to be strong with sales increasing 10 per cent.
“In the current year it is expected that volumes will again be resilient and that the benefits from recent acquisitions, growth in emerging markets, cost reduction initiatives and continued strong cash focus will combine to deliver another year of higher earnings, expressed in constant currency terms.
“Over the next few years the operating cash flow will continue to increase, creating opportunities to further enhance shareholder value. The focus will be on improving the customer value proposition, new product innovation, growth in emerging markets and acquisitions.
“With market leadership in our chosen market segments and an extensive global manufacturing footprint, the company is well positioned to further improve our customer value proposition and deliver improved earnings and returns for shareholders.”