Destocking isn’t over: While other packaging companies’ executives have largely indicated the customer destocking trend ended late last year, Amcor’s executives reported that the company not only still experienced a significant amount of customer destocking in its fiscal Q2, but that it actually accelerated. The worst effects occurred in December, especially in the healthcare business. But signs now are emerging that destocking is easing. “Traditionally, in this business, you'd have some inventory pre-build in what is our fiscal second and fiscal third quarters in advance of the high season in the beverage season in North America,” said CEO Ron Delia. “That's not happening this year.”

Cutting costs: Executives said Amcor’s cost reduction initiatives — such as minimizing discretionary spending, cutting shifts and cutting employees — offset some of the volume softness. Amcor reduced its employee count by about 2,000 people, 5% of the workforce, in the past 12 months, Delia said, with about 1,000 of the cuts occurring from June to December 2023. Although some hiring will occur as volumes return, “it’s not going to be linear,” Casamento said.

Outlook: “We believe Q2 was the low point for earnings growth,” and the upward trajectory is expected to continue, Delia said, noting improved volumes in January compared with December. However, the optimism is measured because “we’re well aware that it’s one month” of improvement and “we’re also not banking on any improvement in the consumer,” he said. Casamento said that while market dynamics are expected “to remain volatile in the near term, volume trajectory is expected to continue to improve through the balance of the year.”