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By the numbers: Fiscal Q3 2024
Net sales: $3.41B
Down 7% year over year
Flexibles net sales: $2.6B
Down 6.8% year over year
Rigid Packaging net sales: $813M
Down 7.6% year over year
Net income: $189M
Up 5.6% year over year
- Results: Amcor’s volumes and revenues declined in its fiscal third quarter, or the three months that ended March 31. But there were quarter-to-quarter improvements, executives said during a Tuesday earnings call, and the company raised its earnings guidance for the fiscal year. Volumes declined 4% year over year, the company reported.
- Flexibles and rigids trends: In the flexibles business, volumes were down 2% year over year but would have been up 1% if not for healthcare, where destocking continued. In the rigids business, volumes were down 8%, with North America beverage volumes falling 11%. The company said those results were impacted by weak consumer demand and destocking. But those healthcare and NA beverage categories only cover about 3% of Amcor’s sales, and, overall, interim CEO Peter Konieczny said destocking abated across most end markets during the quarter.
- Facility closures: Addressing restructuring, CFO Michael Casamento said its current program is about two-thirds of the way through, and it’s spent about $110 million of a projected $170 million on it so far. Casamento said that in the lower-volume environment, the company has been working to eliminate shifts where possible, reduce overtime and do extended shutdowns to cut labor costs. Casamento said Amcor has announced seven plant closures — with three or four completed — and two restructures.
- Plastics reduction targets: Asked about implications if customers potentially push out certain sustainability targets — like how Unilever recently changed the extent of its plastics reduction targets — Konieczny said Amcor has noticed that “some industry participants have started to think about resetting their targets for their sustainability initiatives.” Over the years, the industry has learned a lot, he said. Konieczny noted Amcor’s 2018 pledge to make 100% of its packaging recyclable, reusable or compostable by 2025. “We are holding on to our targets right now. We don’t think that it means anything to us that others are pushing their targets out,” he said.
- Plastics regulation: Konieczny was also asked about any plans Amcor has related to regulation of plastics in the EU, where the Packaging and Packaging Waste Regulation recently advanced. He said Amcor is “very supportive of regulatory and legislative developments” driving the industry toward a circular economy for plastic. “Again, everybody has a role to play. We are sitting in the value chain at pretty much the start. Our job is to come up with structures for plastic packaging that are recycle-ready, that can be recycled.”
- Outlook: During the first earnings call since former CEO Ron Delia retired, executives did not elaborate on the search for a permanent successor. Amcor raised the low end of its earnings guidance, now projecting adjusted earnings per share in the range of 68.5 to 71 cents, up from 67 to 71 cents. It reaffirmed its expectation for adjusted free cash flow between $850 million and $950 million in fiscal 2024.
