• Overall Volume Growth: Up approximately 2% for the fiscal first quarter.
• Adjusted Earnings Per Share (EPS): $0.162 per share, representing 5% growth on a comparable constant currency basis.
• Adjusted EBIT: Grew by 3% with a margin increase of 50 basis points to 10.9%.
• Flexible Segment Volumes: Increased by 3% compared to last year.
• Flexible Segment Adjusted EBIT Margin: Increased by 40 basis points to 12.9%.
• Rigid Packaging Volumes: Declined by 4% compared to last year.
• Rigid Packaging Adjusted EBIT Margin: Increased by 60 basis points to 7.7%.
• Quarterly Dividend: Increased by 2% to $0.1275 per share.
• Free Cash Flow Guidance: Expected to be in the range of $900 million to $1 billion for the year.
• Full-Year EPS Guidance: Reaffirmed at $0.72 to $0.76 per share on a reported basis.

• Warning! GuruFocus has detected 8 Warning Sign with AMCCF.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Amcor PLC (AMCCF) reported a 2% increase in overall volumes for the fiscal first quarter, marking the third consecutive quarter of sequential improvement.
• The company achieved a 5% growth in adjusted earnings per share on a comparable constant currency basis, aligning with expectations.
• Amcor PLC (AMCCF) reaffirmed its full-year guidance, reflecting confidence in continued volume and earnings momentum.
• The company has made strategic organizational changes, including appointing a Chief Operating Officer and Chief Sustainability Officer, to enhance growth and sustainability efforts.
• Amcor PLC (AMCCF) is focusing on expanding its product portfolio in high-growth categories such as dairy and liquid applications, which have significant global growth opportunities.

Negative Points

• Volumes remained weak in the healthcare and North American beverage sectors, negatively impacting overall company volumes by approximately 2%.
• The company experienced a 3% unfavorable impact on sales due to price/mix, primarily driven by continued destocking in higher-margin healthcare categories.
• Amcor PLC (AMCCF) reported a 4% decline in overall volumes for its rigid packaging segment, largely due to soft consumer demand in North American beverages.
• The company's leverage was higher than anticipated, partly due to increased raw material inventories and stronger euro spot rates.
• Amcor PLC (AMCCF) is facing challenges in the healthcare sector, particularly in pharmaceuticals, where destocking is expected to continue into the second quarter.

Q & A Highlights

Q: Can you share specifics on how you intend to drive organic growth in low-growth end markets, and do you anticipate any portfolio repositioning? A: Peter Konieczny, CEO: Driving better organic volume growth is a significant opportunity. We need to focus on service quality and being easy to do business with. We are expanding our commercial excellence program to include organic volume growth initiatives. Leveraging our innovation capabilities and product portfolio across global markets is crucial. While we always consider portfolio adjustments, I currently feel good about our existing portfolio.

Q: Can you confirm if Q1 volume growth was as expected, and what are your expectations for Q2? A: Peter Konieczny, CEO: We are encouraged by Q1 volume performance, which was broadly in line with expectations. Overall company volumes were up 2%, with the rest of the portfolio up 4% excluding healthcare and North American beverage. We expect sequential volume improvement in Q2.

Q: How are your newer products like AmPrima and AmFiber performing, and how do they fit into regulatory trends? A: Peter Konieczny, CEO: We support regulations driving circularity and have developed products like AmFiber and AmPrima to comply. AmFiber is a sustainable, recyclable substrate with barrier properties, while AmPrima is a recyclable plastic-based product. Both are gaining traction in the market, with AmPrima having a sizable base and AmFiber growing from a smaller base.

Q: What was the rationale behind unwinding the Bericap joint venture, and what are the implications for Rigid Packaging earnings? A: Peter Konieczny, CEO: We remain interested in closures but had differing views with our partner on capital requirements and returns. We chose to allocate capital to better opportunities. Michael Casamento, CFO: The joint venture contributed $190 million in annual sales and $19 million in EBIT. The impact on net income is minor after accounting for debt reduction from the sale proceeds.

Q: Given your leaner cost structure, can we expect higher margin improvement than the historical 20-30 basis points? A: Michael Casamento, CFO: While the 20-30 basis point margin improvement has been consistent over time, it can vary with the cycle. We continue to drive efficiency and manage costs tightly. The mix management and portfolio will drive consistency, and we stand by the algorithm as we look forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.