June 19, 2021 FAT-AUS-1020

A good package for the times

Amcor, the world’s biggest consumer packaging firm, recently reported solid numbers for its nine months update, surprising to the upside and lifting its EPS guidance range for the fiscal year. Amcor also increased its quarterly dividend a tad compared to a year ago and we like its considerable pricing power, with company generally able to pass on raw material cost increases to customers with only a modest delay. We believe this position it well for the inflationary environment we see on the horizon.

9M21 headline numbers – US$ unless otherwise noted

Amcor posted solid results for the nine months ended 31 March 2021. Net sales of $9,407 million were up 1% on a reported basis and by 2% on a comparable constant currency basis. The result was driven by 2% higher volumes with no material impact from price/mix.

Adjusted group EBIT increased 8% in reported terms and by 9% in constant currency terms to $1,144 million as the margin expanded 80 basis points to 12.2%. GAAP net income increased 58% to $684 million, equating to GAAP earnings per share of 43.8 cents, up 63%, with the latter given a helping hand by share repurchases. Amcor repurchased 26.7 million shares (1.7% of outstanding shares) during the nine months period for a total cost of $308 million. Amcor expects to complete its $350 million share buyback of ordinary shares and CDIs in fiscal 2021. Adjusted EPS came in at 51.5 cents, up 16% in comparable constant currency terms.

Source: Amcor

Of that EPS growth 7% was organic, while 6% came from incremental Bemis acquisition synergies, which have hit $55 million to date this fiscal year. Management noted progress continues to run ahead of initial expectations and remains on track to deliver $180 million of synergies by the end of FY22. The remaining 3% of EPS growth was from the share buyback.

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