"The result for the first half of the financial year reflected solid growth in emerging markets, ongoing operating improvements and the benefits from recent acquisitions. Earnings per share, for the continuing operations, increased 22% to 27.1 cents per share." Amcor managing director and chief executive officer, Ken MacKenzie, has reason to be confident about 2014.
"The outlook for the full year remains unchanged from the comments made at the full year results in August 2013. It is expected Amcor will deliver another year of higher underlying profits in the current year."
Statutory profit for the half year ended 31 December 2013 including discontinued operations was $159.3 million. Statutory profit for the half year ended 31 December 2013 from continuing operations was $326.6 million compared with $269.4 million for the half year ended 31 December 2012. That is a pleasing snapshot of growth.
Amcor's profit after tax was up 21.2%..Earnings per share were 27.1 cents, up 21.5%. Returns, measured as profit before interest and tax to average funds employed were 17.5%. Operating cash flow after net capital expenditure was $72.0 million. Interim dividend was 19.5 cents per shares.
Flexibles:
The Flexibles segment had a good half year with PBIT, up 3.1% to €288.9 million (AU$438m).
1. Europe and North America
The business had a solid half year. Although sales were relatively flat, earnings, margins and returns were all higher than the same period last year. Overall volumes and market shares remained stable with most end market segments experiencing modest volume movements.
2. Asia Pacific
The Flexibles Asia Pacific business has 33 plants in 7 countries throughout the region. The business had a solid half year with sales up 6.8%and earnings higher. In Australia and New Zealand, the operations benefited from ongoing Aperio acquisition synergies.
Underlying volumes in the Australian market were flat, while volumes in New Zealand were negatively impacted by a poor start to the dairy season and lower exports as the New Zealand dollar strengthened against the Australian dollar.
In November 2013, the A$50 million acquisition of the Detmold Flexibles business was announced. The business has two plants in Melbourne, Australia and sales of approximately A$55 million. The ACCC is expected to make a decision on the acquisition in the coming weeks.
In China, organic sales growth expressed in local currency terms was 11% and earnings were higher.
The business continues to perform well and is gaining share with a number of large customers. In October 2013, the RMB350 million (AU$63.8m) acquisition of the flexible packaging operations of Jiangsu Shenda Group was completed. The business has sales of approximately RMB440 million (AU$80.4m) and establishes Amcor as the market leader in Eastern China.
The Thailand business had a difficult half with sales and earnings lower than the same period last year. This reflects slower economic growth in the domestic market and lower exports to the Philippines in the second quarter following Typhoon Yolanda. The businesses in India, Singapore and Indonesia performed well, delivering solid earnings growth. During the period, the acquisition of a flexible packaging plant in Gujurat, India was completed.
Overall:
"Volumes across developed markets were generally stable and there was continued solid growth in emerging markets. China, one of our larger emerging market exposures, achieved sales growth of 18%, of which 11% was underlying organic growth and 7% was from acquisitions," MacKenzie continued.
"The Rigid Plastics business delivered a solid result with higher margins and returns. This was a good outcome given the cool and wet summer in North America and subdued economic conditions in the US."
"Amcor has an exciting growth agenda through both organic growth and acquisitions. Over the past six months there have been a number of acquisitions announced that will deliver earnings growth over the next few years."
Note that Amcor's financial information was presented on a continuing operations basis. From 31 December 2013, the Australasia and Packaging Distribution business (AAPD) was demerged from the Amcor Group, renamed Orora Limited and listed on the Australian Securities Exchange.
