Despite being hit with charges of A$214m(€155m) resulting from the Alcan takeover and price-fixing settlement payouts, the Australian packaging giant posted an after tax profits of A$357m (€258m) – a year-on-year leap of 95 per cent.
And Amcor signalled its intent to speed up the rate of its growth across the globe - particularly in emerging markets.
Alcan benefits
The company said that advantages from the €1.3bn Alcan buyout were being felt ahead of forecast in the 12 months to the end of June 2011 – with the A$200m synergies so far netted, a year ahead of schedule.
“Cost synergy targets have increased by approximately 25 per cent compared to expectations outlined at the time of acquisition,” said company managing director and CEO Ken MacKenzie. “The underlying operating performance of the business has also improved substantially and we are now 12 months ahead of schedule in terms of improving margins and returns.”
Operations acquired as part of the purchase had added A$142m to the firm’s coffers, said Amcor.
Two factors that had hit its figures were a strong Australian dollar – which cost the firm around A$80m on translation of foreign earnings into the national currency, and the A$35m negative impact from the lag in recovering higher raw material input costs.
“The result for the 2011 year was particularly pleasing,” said MacKenzie. “Profit increased 39 per cent and earnings per share were up 32 per cent. This result was achieved against a backdrop of subdued global economic conditions and an $80 million adverse impact on reported earnings due to the appreciation of the Australian dollar.”
He hailed recent acquisitions as “significant contributors to earnings growth and higher returns”.
The company also announced it would be seeking to buy back up to A$150m of its shares.
“In the current economic environment, these capital management initiatives achieve a balance between returning capital to shareholders, maintaining flexibility to pursue growth and retaining strong credit metrics,” added the Amcor chief.
Segment performance
The rigid plastics division saw earning rise to a record high of A$240m – thanks to improved performance in North and South America, Mexico, and its Bericap closure unit.
The company said its integration of Ball Plastics – completed in August 2010 – was “on track”, with cost savings expected to show up in the second half of 2012.
“The rigid plastics business had a strong year with earnings up 29 per cent,” said MacKenzie. ”This improvement was predominantly driven by an increase in the higher value-add custom volumes in North America and the addition of the Ball Plastics Packaging earnings.”
In its flexible operations, profit before tax jumped from A$252m in 2010 to A$450m 12 months on. A regional breakdown said underlying demand in Europe and the Americas “remained solid”, while earnings and returns in Asia Pacific were “significantly higher”.
MacKenzie said: “The flexibles business had a very strong result with earnings up 78 per cent. The business was successful in enhancing the product mix across a number of key market segments and also benefited from operational improvements at a number of plants. These benefits were partially offset by a lag in recovering substantial raw material cost increases.”
Outlook
Amcor said it was now in a strong position “to accelerate growth in attractive market segments”.
“Our strong footprint in emerging markets enables us to support customers as they expand in these regions,” said MacKenzie.” Growth in emerging markets is being driven by increasing consumer spending and the ongoing trend to safer and higher quality food.”