Amcor bullish on new look to bolster growth
The company, which reported an 8.6 per cent rise in underlying profit for the year to June, said the division was well placed to reap between $30 million and $40 million in cost savings for the current financial year, and $81 million over three years. The savings would come from plant closures, a new paper machine and exiting certain markets.
The company said earlier this month it would demerge the $2 billion business and form a separate listed entity, AAPD.
Chief executive Ken MacKenzie said the restructure would underpin growth in the new business, which will focus on supply and distribution of glass bottles, beverage cans and cardboard packaging in Australia and the US. "Over the next few years, we expect an $81 million cost reduction to be delivered by the business, and that's an important value driver," he said.
Amcor, the world's biggest packaging company, reported full-year net profit of $689.5 million, excluding significant items. It posted a final dividend of 20.5¢ a share, to be paid on September 6.
Mr MacKenzie said the company was on track to deliver continued earnings growth.
"Each of the business segments is expecting to deliver increased earnings in the current year and the strong cash-flow generation will ensure there is the opportunity to deliver further growth in shareholder value," he said.
He said the company would continue to push into emerging markets as conditions in the US, Australia and Europe remained subdued.
"We have expanded our exposure to these markets over the past 12 months through new capital projects and acquisitions."
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Amcor plans to spin off its Australasian packaging distribution business into a separate listed entity (AAPD) by the end of the year. The demerger separates the roughly $2 billion distribution business from Amcor's core packaging operations.
Amcor expects the division to deliver between $30 million and $40 million in cost savings in the current financial year and about $81 million in savings over three years, driven by plant closures, a new paper machine and exiting certain markets.
According to Amcor, the new listed business (AAPD) will focus on supply and distribution of glass bottles, beverage cans and cardboard packaging in Australia and the United States.
Amcor reported an 8.6% rise in underlying profit for the year to June and a full-year net profit of $689.5 million excluding significant items. The company also declared a final dividend of 20.5¢ a share payable on September 6.
CEO Ken MacKenzie said the restructure and the targeted $81 million cost reduction will underpin growth in the new business. Amcor expects each business segment to deliver increased earnings and believes strong cash-flow generation will create opportunities to grow shareholder value.
Amcor says the savings will come from specific operational moves including plant closures, installing a new paper machine and exiting certain markets that are less strategic for the distribution business.
Amcor plans to continue pushing into emerging markets, having expanded its exposure over the past 12 months through capital projects and acquisitions, while acknowledging conditions in the US, Australia and Europe remain subdued.
Everyday investors should watch for completion of the demerger by the end of the year, delivery of the announced cost savings (the $30–$40 million this year and $81 million over three years), progress on plant closures and the new paper machine, and updates on AAPD's listed performance once it is spun off.