Amcor reports first quarter result and reaffirms outlook for fiscal 2025
Highlights - Three Months Ended September 30, 2024
Third consecutive quarter of sequential improvement in volume growth;
Net sales of $3,353 million;
GAAP Net income of $191 million; GAAP diluted earnings per share (EPS) of 13.2 cps;
Adjusted EBIT of $365 million, up 3% on a comparable constant currency basis;
Adjusted EPS of 16.2 cps, up 5% on a comparable constant currency basis; and
Quarterly dividend increased to 12.75 cents per share.
Fiscal 2025 outlook reaffirmed
Adjusted EPS of 72-76 cents per share; Adjusted Free Cash Flow of $900-1,000 million.
ZURICH, Oct. 31, 2024 /PRNewswire/ --
Amcor delivers another quarter of solid earnings and volume growth; Reaffirms FY25 guidance
Amcor CEO Peter Konieczny said: "Amcor started fiscal 2025 well, with volume growth and customer demand dynamics continuing to improve. Adjusted EPS was up 5%, and our Flexibles and Rigid Packaging businesses each contributed to this solid growth through sequential volume improvement and by maintaining an unwavering focus on managing costs and margin quality. These results are aligned with the expectations we set out in August, which gives us the confidence to reaffirm our guidance for the fiscal year."
"I am pleased with the overall performance trajectory of the business and I am excited about the significant opportunities we have ahead of us to enhance our profitable organic growth profile, continue to build earnings momentum and evolve into an even stronger company than we are today. We have already taken a number of concrete actions to further leverage Amcor's market leading positions and capabilities and strengthen our ability to generate attractive, sustainable shareholder returns. We also remain committed to disciplined execution against our capital allocation framework and strategy for growth, and will continue to invest in the business, pursue M&A opportunities or repurchase shares, and return cash to shareholders through a compelling and growing dividend."
Key Financials
Three Months Ended September 30,
GAAP results
2023 $ million
2024 $ million
Net sales
3,443
3,353
Net income attributable to Amcor plc
152
191
EPS (diluted US cents)
10.5
13.2
Comparable constant currency ∆%
Three Months Ended September 30,
Reported ∆%
Adjusted non-GAAP results(1)
2023 $ million
2024 $ million
Net sales
3,443
3,353
(3)
(2)
EBITDA
459
466
2
3
EBIT
358
365
2
3
Net income
226
234
3
5
EPS (diluted US cents)
15.6
16.2
3
5
Free Cash Flow
(227)
(395)
(1) Adjusted non-GAAP results exclude items which are not considered representative of ongoing operations. Comparable constant currency ∆% excludes the impact of movements in foreign exchange rates and items affecting comparability. Further details related to non-GAAP measures and reconciliations to GAAP measures can be found under "Presentation of non-GAAP information" in this release.
Note: All amounts referenced throughout this document are in US dollars unless otherwise indicated and numbers may not add up precisely to the totals provided due to rounding.
Shareholder returns
Amcor generates significant annual cash flow and is committed to an investment grade credit rating. We believe that the Company's strong annual cash flow and balance sheet provides capacity to reinvest in the business for organic growth, pursue acquisitions or share repurchases and return cash to shareholders through a compelling and growing dividend.
Dividend
The Amcor Board of Directors today declared a quarterly cash dividend of 12.75 cents per share (compared with 12.5 cents per share in the same quarter last year). The dividend will be paid in US dollars to holders of Amcor's ordinary shares trading on the NYSE. Holders of CDIs trading on the ASX will receive an unfranked dividend of 19.19 Australian cents per share, which reflects the quarterly dividend of 12.75 cents per share converted at an AUD:USD average exchange rate of 0.6645 over the five trading days ended October 28, 2024.
The ex-dividend date will be November 20, 2024 for holders of CDIs trading on the ASX and November 21, 2024 for holders of shares trading on the NYSE. For all shareholders the record date will be November 21, 2024 and the payment date will be December 11, 2024.
Financial results - Three Months Ended September 30, 2024
Segment information
Three Months Ended September 30, 2023
Three Months Ended September 30, 2024
Adjusted non-GAAP results
Net sales
$ million
EBIT
$ million
EBIT / Sales %
EBIT / Average funds employed %(1)
Net sales $ million
EBIT
$ million
EBIT / Sales %
EBIT / Average funds employed %(1)
Flexibles
2,568
322
12.5
2,552
329
12.9
Rigid Packaging
875
62
7.1
801
62
7.7
Other(2)
—
(26)
—
(26)
Total Amcor
3,443
358
10.4
15.0
3,353
365
10.9
14.8
(1) Return on average funds employed includes shareholders' equity and net debt, calculated using a four quarter average and last twelve months adjusted EBIT.
(2) Represents corporate expenses.
Net sales of $3,353 million were 3% lower than last year on a reported basis, including an unfavorable impact of 1% related to the pass through of lower raw material costs of approximately $20 million. Movements in foreign exchange rates had an unfavorable impact on net sales of less than 1% for the quarter.
Volumes were up approximately 2% compared with the same quarter last year, which represents a sequential improvement of 1 percentage point when compared to year over year volume growth in the quarter ended June 30, 2024. As expected, volumes remained soft in healthcare categories and in the North America beverage business, unfavorably impacting overall volumes by approximately 2%. Across the balance of the business, overall volumes were approximately 4% higher than the prior year. Price/mix had an unfavorable impact of approximately 3%, primarily due to lower volumes in high value healthcare categories. On a comparable constant currency basis, net sales were down less than 2% compared with last year.
Adjusted EBIT of $365 million was approximately 3% higher than last year on a comparable constant currency basis. Unfavorable impacts from price/mix were more than offset by higher volumes, continued strong cost performance and benefits from restructuring initiatives. As a result, adjusted EBIT margin also improved to 10.9%, a 50 basis point increase over the prior year.
Flexibles segment
Three Months Ended September 30,
Reported ∆%
Comparable constant currency ∆%
2023 $ million
2024 $ million
Net sales
2,568
2,552
(1)
(1)
Adjusted EBIT
322
329
2
3
Adjusted EBIT / Sales %
12.5
12.9
Net sales of $2,552 million were 1% lower than last year on a reported basis. Unfavorable movements in foreign exchange rates and favorable impacts related to the pass through of higher raw material costs each had an offsetting impact on net sales of less than 1%.
Volumes improved sequentially and were up approximately 3% compared with the prior year with continued growth across most geographies. As expected, destocking continued in healthcare categories and volumes remained soft, unfavorably impacting overall segment volumes for the quarter by approximately 2%. Across the balance of the Flexibles business, overall volumes were approximately 5% higher than the prior year. Price/mix had an unfavorable impact on net sales of approximately 4%, primarily due to lower volumes in high value healthcare categories. On a comparable constant currency basis net sales were approximately 1% lower than last year.
In North America, net sales declined at low single digit rates driven by unfavorable price/mix, partly offset by low single digit volume growth. Volumes were higher in categories including meat, liquids and fresh & frozen foods categories and this was partly offset by lower volumes in categories including healthcare and home & personal care.
In Europe, net sales declined at low single digit rates driven by unfavorable price/mix, partly offset by mid single digit volume growth. Volumes were higher in the dairy, single serve coffee, meat, home & personal care and ready meal end markets and this was partly offset by lower volumes in categories including healthcare and snacks & confectionary.
Across the Asian region, sales and volumes increased at low single digit rates with growth in India and China, partly offset by lower volumes in the Philippines. In Latin America, net sales and volumes increased at mid single digit rates, largely driven by growth in Brazil and Peru.
Adjusted EBIT of $329 million was 3% higher than last year on a comparable constant currency basis. The positive impact of higher volumes, benefits from restructuring initiatives and continued strong cost performance was partly offset by unfavorable price/mix. Adjusted EBIT margin of 12.9% was 40 basis points higher than the September quarter last year.
Rigid Packaging segment
Three Months Ended September 30,
Reported ∆%
Comparable constant currency ∆%
2023 $ million
2024 $ million
Net sales
875
801
(8)
(4)
Adjusted EBIT
62
62
—
2
Adjusted EBIT / Sales %
7.1
7.7
Net sales of $801 million were 8% lower than last year on a reported basis, including an unfavorable impact of approximately 1% related to movements in foreign exchange rates and an unfavorable impact of approximately 3% related to the pass through of lower raw material costs of approximately $25 million.
On a comparable constant currency basis, net sales were approximately 4% lower than last year reflecting lower volumes.
In North America, beverage volumes declined at high single digit rates as a result of continued soft consumer and customer demand which was expected. In Latin America, volumes declined at mid single digit rates primarily reflecting lower volumes in Argentina and Colombia, partly offset by growth in Mexico. Across the balance of the Rigid Packaging business volumes were in line with last year.
Adjusted EBIT of $62 million was 2% higher than last year on a comparable constant currency basis, with the impact of lower volumes more than offset by favorable price/mix and benefits from continued cost actions. Adjusted EBIT margin of 7.7% was 60 basis points higher than the September quarter last year.
Net interest and income tax expense
For the three months ended September 30, 2024, net interest expense of $75 million was in line with last year. GAAP income tax expense was $43 million compared with $39 million last year. Adjusted tax expense for the three months ended September 30, 2024 of $54 million was in line with last year. Adjusted tax expense for the three months ended September 30, 2024 represents an effective tax rate of 18.6%, compared with 19.1% in the prior year.
Adjusted Free Cash Flow
For the three months ended September 30, 2024, adjusted free cash outflow was $395 million, compared with an outflow of $227 million last year. The increased outflow mainly reflects the impact of higher inventories to service improving volumes and an expected increase in capital expenditure.
Net debt was $6,872 million at September 30, 2024 and leverage, measured as net debt divided by adjusted trailing twelve month EBITDA, was 3.5 times. Movements in spot exchange rates had an adverse impact of approximately 0.1 times on leverage at quarter end. Leverage is expected to be at or below 3.0x at June 30, 2025.
Fiscal 2025 Guidance reaffirmed
For the twelve month period ending June 30, 2025, the Company continues to expect:
Adjusted EPS of approximately 72 to 76 cents per share, which represents comparable constant currency growth of 3% to 8% (includes approximately 4% headwind related to normalization of incentive compensation payments) compared with 70.2 cents per share in fiscal 2024.
Assuming current exchange rates prevail through fiscal 2025, movements in exchange rates are not expected to have a material impact on reported EPS.
Adjusted Free Cash Flow of approximately $900 million to $1,000 million.
Amcor's guidance contemplates a range of factors which create a degree of uncertainty and complexity when estimating future financial results. Further information can be found under 'Cautionary Statement Regarding Forward-Looking Statements' in this release.
Conference Call
Amcor is hosting a conference call with investors and analysts to discuss these results on Thursday October 31, 2024 at 5:30pm US Eastern Daylight Time / Friday November 1, 2024 at 8:30am Australian Eastern Daylight Time. Investors are invited to listen to a live webcast of the conference call at our website, www.amcor.com, in the "Investors" section.
Those wishing to access the call should use the following toll-free numbers, with the Conference ID: 2990465
USA: 800 715 9871 (toll free)
USA: 646 307 1963 (local)
Australia: 1800 519 630 (toll free), 02 9133 7103 (local)
United Kingdom: 0800 358 0970 (toll free), 020 3433 3846 (local)
Singapore: +65 3159 5133 (local)
Hong Kong: +852 3002 3410 (local)
From all other countries, the call can be accessed by dialing +1 646 307 1963 (toll).
A replay of the webcast will also be available in the 'Investors" section at www.amcor.com following the call.
About Amcor
Amcor is a global leader in developing and producing responsible packaging solutions across a variety of materials for food, beverage, pharmaceutical, medical, home and personal-care, and other products. Amcor works with leading companies around the world to protect products, differentiate brands, and improve supply chains. The Company offers a range of innovative, differentiating flexible and rigid packaging, specialty cartons, closures and services. The company is focused on making packaging that is increasingly recyclable, reusable, lighter weight and made using an increasing amount of recycled content. In fiscal year 2024, 41,000 Amcor people generated $13.6 billion in annual sales from operations that span 212 locations in 40 countries. NYSE: AMCR; ASX: AMC
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