It highlighted buoyant returns in emerging markets and said its rigid operations should see an upswing in the second half of the year after a lacklustre first six months.
Profits, currency losses and plant closures
The Australia-based company posted six-month profits to the end of December 2011 of A$304m (€247m) as demand held firm in Europe and North America, while performance in Asia Pacific was highlighted as strong.
But it said that profits actually fell year-on-year by over 9% to $205m after almost A$100m relating mainly to acquisition and plant closure costs were taken into account. The firm closed a flexible packaging plant in Viersen, Germany, in December 2011 and has said that a further facility in Australia would be shuttered by June 2012.
Currency exchange costs due to the strong Australian dollar also hit profits by $16m.
However, Amcor stressed that underlying profits were up as it reaffirmed the positive contribution made to its performance by the Alcan and Ball takeovers.
“These results are particularly pleasing given the backdrop of subdued economic conditions globally and a $16 million adverse impact on reported earnings due to the appreciation of the Australian dollar,” said managing director and CEO, Mr Ken MacKenzie.
He added: “The transformational acquisitions made in 2009 and 2010, during the global financial crisis, were significant contributors to achieving this record performance. These acquisitions have delivered substantial cost synergies and enabled the businesses to significantly improve their value proposition to customers. The benefits from the Alcan Packaging acquisition have considerably exceeded expectations in terms of both quantum and timing.”
The Amcor chief hailed the strong performance of the flexible unit in H1 with earning before tax rising by almost a quarter to A$329m. However, sales revenue dipped from A$3.1bn in 2011 to just over $3bn 12 months on.
Earnings for the Europe and Americas flexible unit were said to be “substantially higher” year-on-year thanks to cost savings, better product mix and a reduced negative impact from raw material price increases.
It said that volumes were stable “despite challenging economic conditions”. North American volumes rose slightly thanks mainly to growth in pharmaceutical and high performance food applications, while European demand was “generally stable”.
In Asia Pacific performance was described as “strong”, particularly in China. The company said it had reached agreement to buy out minority stakes in its plants in Beijing and Chengdu. Amcor currently holds 75% and 40% stakes respectively in the facilities, and expects both deals to be completed by September 2012.
The move will provide additional leverage for growth opportunities currently being pursued in the northern and eastern China, it said.
Amcor said the outlook for the second half is for stable volumes in mature markets and continued growth in emerging markets.
Profit before taxes in its rigid business rose 15%, although sales revenues dipped A$81m to just over A$1.4bn.
“This was achieved against a backdrop of a much cooler summer period which negatively impacted beverage sales during the peak summer months,” said MacKenzie. “During the half, the business benefited from cost synergies and operating improvements.”
Overall beverage volumes across the group for the half were 1% higher than the same period last year, comprising custom container volumes 6% lower and carbonated soft drink and water (CSDW) volumes 4% higher. Sales for Diversified Products increased by 6%.
Performance in Central and South America was “solid” with earnings and beverage volumes up marginally.
There was continued strong growth in Colombia and Argentina, partly offset by a 3% decline in volumes in Brazil as economic conditions weakened during the period.
Across the region, cost saving benefits and higher beverage volumes offset the negative impact of the US$4m fall in profits in Brazil.
Amcor predicted substantial growth for the rigid unit for the full year 2012 if key markets hit their growth forecasts.