Long suffering shareholders in Amcor have been told there is light at the end of the tunnel that will mark the end of years of entanglement in the nasty Visy cardboard carton cartel, and serial underperformance.
Poor investment in numerous businesses here and around the world have turned what was a growing multi-national five or so years ago, into a floundering, asset rich takeover target that no one so far has wanted.
Earnings have suffered, management has been changed and Amcor didn't need the diversions associated with being caught up in the Visy cardboard carton cartel and all its fall out.
The company still faces civil action from customers and comment on the present situation of those cases was not forthcoming.
But it was emphasised that Amcor was not caught up in the ACCC court action against Visy because it had blown the whistle as soon as the board learned of the claims of the cartel and had carried out extensive internal reviews and re-education on competition issues.
But despite the headlines associated with the Visy case and its lurid claims, Amcor (AMC) has bigger problems: a disparate group of assets that have so far shown little ability to generate superior returns.
But could that hesitant performance be about to change?
Well, maybe. The meeting got the unhappy news that there's a profit downgrade of around $35 million in the wings due to the stronger US dollar and the stronger euro. But it would seem the board and management believe the company's underlying performance is bouncing back.
Amcor Chairman, Chris Roberts, told the AGM in Melbourne yesterday that the company "has made substantial changes over the past two years and benefits from these changes are now being realised in an improved operating performance.
"This was evident in the second half of the 2006/07 year and expectations are for this trend to continue in the current financial year.
"This improvement is being achieved against a backdrop of continuing increases in input costs, with Amcor being on the other side of the global commodity and energy boom.
"Delivering improvements in this operating environment reinforces your Board's belief that the changes being implemented are driving growth in shareholder value and when these adverse external factors ease, this improvement will be increasingly evident."
It was a message echoed by CEO, Ken McKenzie, who told the meeting that "there has been solid performance in the first quarter (of the current year) with all segments at or ahead of the same period last year on a local currency and continuing business basis. It is anticipated that this improving trend will continue across all the business units for the balance of the year."
He did have one proviso: currency changes with the company exposed to the strong Aussie dollar against the greenback and the strong euro. At the moment earnings could be clipped by $35 million if current currency values (for the Aussie-US and Aussie-euro rates) are maintained.
"The actual reported profit, expressed in Australian dollar terms, will depend on the translation of the overseas earnings into Australian dollars.
"The sensitivity to reported earnings due to the translation impact of the higher Australian dollar on the reported profit after tax is approximately $3 million for every one cent movement against the US dollar and approximately $2 million for every one cent movement against the euro.
"Last year the average exchange rate against the US dollar was 79 cents and 60 cents against the euro. For the first three months of the current year, the average has been 85 cents against the US dollar and 62 cents against the euro. The current exchange rate against the US dollar is 90 cents."
Mr Mckenzie said that should the current US dollar rate of 90 cents and euro rate of 63 cents continue for the balance of the year, it is anticipated that the negative foreign currency translation impact on profit after tax earnings will be around $35 million.
The CEO was upbeat (as he should) about Amcor's prospects: "Following the divestment program, Amcor's portfolio is more focused on those market segments where we can win.
"The three turnaround programs are in various stages of completion, however we are confident that the cost reductions and operational improvements anticipated will be realised.
"The disciplines around all aspects of capital expenditure and cash flow are continuously improving and the benefits are evident in the results over the past two years.
"The culture is changing. There has been important progress in talent management and these changes will help underpin the sustainability of improvements in all the other areas.
"The second half of 2006/07 year was a turning point for the company with the efforts of the past two years being translated into improved earnings," he concluded.
The task now is to deliver on this optimism with higher and consistently growing earnings.
The fact that the world economy has been going gangbusters for much of the past three years, and Amcor has not been able to ride the boom, says a lot about the poor management in the past.
Shareholders could be excused for thinking they are in a time warp: their reaction to the confidence was to mark down the share price to $7.18 yesterday, a fall of 13c.
