Amcor’s interim was a bit anti-climatic after the company-changing the deal it has just closed on which saw it buy much of the packing assets of Alcan from its willing seller, Rio Tinto.
The $US1.9 billion purchase will change Amcor, giving it more heft in global markets.
So the 3% rise in first-half profit was a bit ho- hum, a base from which to judge the performance of the company’s integration of the Alcan assets in the next year or so.
Net profit before one-offs rose to $172.5 million in the six months to December from $167.4 million a year earlier, the company told the ASX yesterday.
Amcor declared an interim dividend of 12.5 cents, down from 17 cents in the prior corresponding period, but on capital expanded by a share issue that raised finance to help pay for the Alcan purchase.
Judging by directors’ comments, Amcor is expecting the Alcan deal to have an immediate income benefit.
Analysts expect the group’s profit this year to be heavily weighted to the current half with the Alcan business now a part of the company since early this month.
"Volumes have stabilised at levels higher than those experienced in the second half of 2008/09 and prices for waste paper are currently higher than the second half last year," Amcor said in a statement.
"As a result, if current conditions continue, earnings are expected to be substantially higher in the second half relative to the same period last year."
Amcor has made big offshore deals in the past and has fluffed them.
It was why some big investors were sceptical of its play for the Alcan assets, especially with global markets weak and demand in major economies in the developed world not expected to recover for a year or more.
But emerging markets, especially in Asia, are rebounding strongly, Australia included.
Amcor said the higher Australian dollar had cost it $16.4 million after tax but before significant items, which included a $77.5 million charge relating to the Alcan purchase.
Amcor’s CEO, Ken MacKenzie, said in the statement that the half-year result was "particularly pleasing given economic conditions were considerably weaker than the previous comparative period.
"More than 80 per cent of our sales are into the food, beverage, healthcare and tobacco packaging segments and the defensive nature of these segments was evident during this period of economic weakness," Mr MacKenzie said in a statement.
"Excellent management of costs across all the businesses helped offset the impact of lower volumes in some sectors and, on a constant currency basis, profit before interest and tax for the half was up 3.1 per cent.
“In summary, although economic conditions in many countries remain difficult, Amcor businesses delivered solid earnings and an outstanding cash flow performance in the first half.
“Even though it is unclear when economies will improve, the Alcan acquisition gives us confidence we can grow shareholder value through the ability to enhance our value proposition to customers, improve our operational performance and reduce costs.”
Mr MacKenzie said Amcor’s Australasian business had performed well, benefiting from restructuring and a better operational performance which had delivered higher earnings than in the previous corresponding half year.
Healthcare and tobacco packaging operations had had "particularly strong performances", he said, with volumes resistant to the global economic slowdown.
On the Alcan acquisition, Mr MacKenzie said the company was confident of achieving $200 million to $250 million in savings in overheads, procurement, and in more efficient operations.
Amcor shares ended up 7c at $6.04.
