Securities in US based global packaging giant, Amcor jumped sharply on Wednesday after the company revealed a solid boost to earnings and revenue from the long takeover of American packager Bemis (which saw Amcor move its domicile to America).
Directors boosted interim dividend and the current share buyback and raised the outlook for the year to June 30.
That saw the depository securities listed on the ASX rise 4.4% to $15.03. That was after they were up 7% in early trading.
The company reported net profit of $US417 million for the six months to December, up 65% after reporting earnings before interest and Tax (EBIT) of $US743 million (up 8% in constant currency terms).
Net sales rose slightly to $US6.2 billion from $US6.184 billion in the previous half year.
“First half net sales for the Amcor Group of $6,200 million were 3% higher than the same period last year excluding a combined unfavorable impact of currency and the pass through of lower raw material costs. Overall volumes were 3% higher than the prior period and price/mix had no material impact on net sales,” Amcor explained in Wednesday’s statement..
Quarterly dividend was raised to 11.75 US cents a share from 11.5 cents a year ago.
The company said it saw $US35 million in cost synergies in six months from the integration of Bemis and raised the full year estimate to $US70 million from the previous wide range of $US50 to $US70 miliion
And the board added a further $US200 million of share repurchases to the current program, bringing the total announced in fiscal 2021 to $US350 million. Amcor said it bought 6.5 million shares in the December half year.
And the 2020-21 outlook for adjusted earnings per share growth was raised to a range of 10% to 14% from the previous 7% to 12% (i constant currencies).
In Wednesday’s statement, CEO Ron Delia said:the company delivered strong financial results ahead of our expectations for the first half and we have raised the outlook for the full year as our teams continue to demonstrate resilience and outstanding execution.”
“Sales growth of 3% was balanced across our businesses and regions, cost performance has been strong and synergies from the Bemis acquisition are running ahead of schedule.
“We have built momentum in both operating segments resulting in Adjusted EBIT growth of 9% in Flexibles and 10% in Rigid Packaging in constant currency terms.
“That momentum translates into higher expectations for the full year with Adjusted EPS growth now forecast at 10-14% in constant currency terms as well as an increased dividend and additional share repurchases.”
“Amcor’s investment case remains as strong as ever. We are well positioned to continue generating growth from attractive consumer and healthcare end markets, our leadership and scale in emerging markets and our extensive innovation capabilities.
“With annual free cash flow of more than $1 billion, we have substantial capacity to create value for shareholders by reinvesting in the business, pursuing acquisitions, and returning capital through a compelling and growing dividend and share repurchases,” he said.
Amcor said the holders of CDIs trading on the ASX will receive an unfranked dividend of 15.21 Australian cents per share, which reflects the quarterly dividend of 11.75 cents per share converted at an AUD:USD average exchange rate of 0.7724 over the five trading days ended January 28, 2021.
The ex-dividend date will be February 23, 2021, the record date will be February 24, 2021 and the payment date will be March 16, 2021.
