Packaging giant Amcor (AMC) manages consistently to convince investors it is on track, even after reporting what seemed, on first impression, a weak result.
The company yesterday said that first-half net profit fell 6% to $US286.6 million, but it says underlying earnings are stronger and it is on track to meet full year guidance.
And investors lapped up that assurance with Amcor shares up 4.3% higher to end yesterday at $15.18, while the wider market was only up 0.7%.
Why? Well the company and its management have consistently matched word with deed. There was a sense of caution in the commentary and the half a cent rise in the interim payout. Donald Trump and his blusterings have introduced an unstable note into business conditions, especially in North America where Amcor is a major player, and in Latin and South America (where Venezuela is a continuing black hole).
And currency movement continue to be an important factor, both on the upside, and on the downside in some markets.
That said, Amcor said yesterday that underlying profit, adjusted on a constant currency basis and removing significant items, was up an inflation beating 3.8% at $US308.6 million for the six months to December 30.
Amcor says full-year expectation for growth in profit after tax remains unchanged and it will pay an unfranked interim dividend of US19.5 cents, up half a cent a share.
The result came on a 1.8% dip in sales to $4.47 billion.
“The result illustrates the defensiveness and resilience of our unique global packaging business and our strategy,” chief executive Ron Delia said in a statement yesterday.
“Earnings growth was balanced across the flexibles and rigid plastics segments, and came from both organic sources and recently acquired businesses.
Mr Delia said that Amcor’s outlook for "continued growth" in profit was unchanged. The company has said only that it expects profit after tax "to be higher than the $US671.1 million in the 2015-16 year".
Amcor says its reults will be helped by the acquisitions of Alusa, South America’s largest flexible packaging manufacturer, and North American specialty containers maker Sonoco in 2016, and the restructuring in its flexibles business.
These he said will underpin more than $US150 million in growth in profit before tax and interest over the next three years.
"We made a number of strategic investments in the last nine months or so. We’re making good progress on those," Amcor chief executive Ron Delia said on Monday.
"We’re still well placed in the current environment, and more importantly, we feel like we’ve got good growth embedded in our business for the medium to longer term."
Amcor’s bottom line took a previously-flagged $US25 million pre-tax hit related to its rigid plastics operations in Venezuela, where economic conditions have again deteriorated badly.
Excluding Venezuela, Amcor’s profit after tax was up 3.8 per cent to $US308.6 million ($A401.7 million) on a constant currency basis.
