Amcor Shares Crumple on Grim Outlook

By Glenn Dyer | More Articles by Glenn Dyer

Shares in Amcor, Australia’s global packaging giant, fell nearly 12% at one stage on Wednesday after the company dropped June 30 earnings by 5% and warned that consumers were cutting spending on goods using its products.

CEO Ron Delia blamed continuing inflationary pressures for the rising level of hesitancy among consumers who are under pressure anyway from falling real wages and the impact of higher interest rates.

Delia said in commentary with Amcor’s March quarter results that the cumulative impact of price rises right through the economy was driving the slowdown which in turn prompted the company to downgrade its full-year profit forecast by about 5%.

That saw Amcor drop sharply in early trading before closing at $14.91, down 9.5%.

In its report, Amcor March quarter sales edged down 1% to $US3.67 billion, ahead of what it saw as lingering challenges in the June quarter.

Net income fell to $US177 million for the quarter from $US269 million in the third quarter of 2021-22.

Amcor said it expects the demand environment in the June quarter “to remain soft with heightened volatility. Overall volumes expected to be down mid-single digits.”

“We were cautious on market dynamics entering the third quarter and continued to take decisive price and cost actions,” the company said.

“These efforts helped offset continued softness and increased volatility in the demand environment leading to a modest 2.5% decline in adjusted EBIT for the third quarter. CEO Delia said in his commentary.

“Our expectation that current market conditions will persist in the near-term means we are also laser focused on continued initiatives to recover inflation, drive cost productivity and advance previously announced structural cost reductions.

“We have adjusted our fiscal 2023 outlook to reflect the challenging operating environment and the actions we are taking give us confidence that earnings growth will build as we progress through fiscal 2024.

“Through the first nine months of fiscal 2023, Amcor has delivered 4% higher adjusted earnings in comparable constant currency terms and returned approximately $US750 million of cash to shareholders,” Delia said.

Net income for the 9 months rose 25% to $US868 million from $US696 million in the same period of 2021-22.

The company lifted quarterly dividend by a quarter of a cent to 12.25 cents per share for the three months to March. Australian shareholders will receive 18.43 A cents a share if they hold CDIs (CHESS Depositary Interests).

Amcor said it repurchased around 18 million shares during the nine months ended March 31, 2023 for a total cost of about $US200 million.

As previously announced, the company expects up to $US500 million in cash will be allocated to share repurchases in fiscal 2023.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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