Good news of any description was in short supply yesterday’s stock market rout.
The market slumped more than 2.8% or more than 160 points with the rate of fall accelerating through the session – it opened down around 102 points and just kept flopping lower.
There were a couple of stocks to resist the sell-off – Fortescue Metals was one with a well-timed share buyback announcement. The other was the annual meeting of packaging giant, Amcor which provided a well-timed trading update for the start of its 2018-19 financial year.
No problems and the huge $7 billion pus Bemis takeover remains on track according to CEO, Ron Delia.
The news helped the shares rise a solid 1.6% to $13,33 in yesterday’s bloodbath.
He told the meeting that Amcor “had a good start to the year with the first quarter performance in line with expectations…there are no changes to the outlook statements we provided in August.
“In August, we said we were encouraged by early indications that the industry challenges experienced in the 2018 financial year had started to stabilise and those encouraging signs continued through the balance of the first quarter.
“In the flexibles segment, there has been good, continued traction in recovering higher raw material costs and we continue to expect only a modest earnings impact in H1.
“In the Rigid Plastics business, we have seen modest volume growth continue in the North American beverage end market.
“In emerging markets across Amcor, we have continued to see good growth in the first quarter, building on the trend we saw in the second half of 2018. Specifically, the Rigid Plastics business in Latin America, the flexibles business in Asia and Specialty Cartons in Eastern Europe have all experienced a good start to the year.
“Finally, all cost reduction initiatives across the group remain on track, including the completion of the flexibles restructuring program and the initial stages of the rigid plastics productivity improvements,” he told the meeting.
He told shareholders that it had been a good start to the year and in line with expectations.
“We remain confident of delivering strong cash flow and constant currency earnings growth in the 2019 financial year. That earnings growth will be weighted towards the second half, given among other things, the timing of restructuring and integration costs, and the fact that our interest costs will be lower in the second half of the year relative to the first half.”
On the Bemis deal, Mr. Delia said that after closing of the Bemis acquisition transaction, Amcor will generate sales of $US13 billion, EBITDA of $US2.2 billion and annual cash flow of more than $US1 billion.
He said Amcor will continue to be uniquely positioned with leadership positions in multiple product categories as the global leader in Flexible Packaging, the global leader in Specialty Cartons, the leader in Rigid Plastics in North America and Latin America and a sizeable player in the global closures space.
The company, he said will also maintain an investment grade balance sheet and, with annual cash flow exceeding $US1 billion, we will continue to provide shareholders with a competitive dividend which will increase over time.
“In addition, there will be immediate capacity for further investment or share buybacks – again, the additional upside that has not been factored into the transaction metrics,” he said.
The all-share transaction structure results will see Amcor shares being listed on two major exchanges: the New York Stock Exchange (NYSE) and the Australian Securities Exchange (ASX).
