Amcor shares rose 2.3% yesterday in the wake of an encouraging three- and nine-month trading update.
Amcor is now a predominantly US focused company after the $US6 billion all paper takeover of American packager, Bemis in June 2019.
That changed the balance in the company to where the US now wags the rest of the company and its Australian businesses.
For the nine months ended 31 March, Amcor reported a 12% increase in net income to $US805 million.
Unlike the negative reception that ANZ’s good performance received yesterday, investors welcomed the Amcor report and the shares rose 2.7% to $15.81.
Directors said this was driven by a modest increase in sales and improving margins. Adjusted EBIT of $US1.144 billion, up 9% on a comparable constant currency basis;
Amcor said it had wrung $US55 million in cost gains from the Bemis takeover so far in 2020-21 with another $US70 million forecast for the 2021 financial year.
That would leave the company “well positioned to deliver at least $OS180 million by end of fiscal 2022,” Amcor said in Wednesday’s release to the ASX.
Shareholders will receive a higher quarterly dividend of 11.75 US cents a share, up from 11.50 cents for the March quarter of 2020.
Around 1.7% (26.7 million for a total cost of $US308 million) of outstanding shares repurchased year to date; and the company said it expects to complete the previously approved $US350 million repurchase of ordinary shares and CDIs in the year to June.
Earnings per share growth for the year to June was lifted to 14-15% in constant currency terms (previously 10-14%) – that’s not only due to better performance but the impact of the buyback.
In a statement with the results, Amcor’s CEO Ron Delia said: “Amcor is maintaining momentum and executing well in the face of a dynamic operating environment. As a result, we delivered strong year-to-date performance and we are raising our full year adjusted EPS growth outlook to 14-15% in constant currency terms.”
“The business delivered strong adjusted EBIT growth of 9% on a year-to-date basis and organic growth has continued to strengthen as we progress through the fiscal 2021 year.
“Delivery of cost synergies related to the Bemis acquisition continues to progress ahead of original expectations leaving us well positioned to exceed the original target with at least $180 million of pre-tax benefits by the end of fiscal 2022.”
“Amcor has a clearly defined, consistent capital allocation framework which starts with strong annual Free Cash Flow in excess of $1 billion and growing. We are actively investing in the future, expanding capacity in higher value segments and higher growth markets and increasingly using open innovation and now corporate venturing to identify new avenues of growth.
“Growth investments like these, along with continued strong execution, will enable continued momentum and reinforce our belief that the Amcor investment case has never been stronger.”
