Earnings Highlights

Amcor Q1 2025 Earnings Call Highlights

Fri 01 Nov 24, 10:31am (AEDT)
industrial packaging

Amcor (ASX: AMC) shares dipped 4.2% in early trade to a fresh two-month low after its first quarter FY25 earnings missed analyst expectations.

1Q25 Earnings Summary

  • Net sales down 3% to $3.35 billion (consensus: $3.43bn or 2.3% miss)

  • Adjusted EBIT up 3% to $365 million (consensus: $372.5m or 2.0% miss)

  • Net income up 3% to $234 million (consensus: $225.6m or 3.7% beat)

  • Free cash outflow of $395 million

  • EBITDA up 2% to $466 million (consensus: $473.1m or 1.5% miss)

  • Quarterly dividend of 12.75 cents per share

  • Reaffirmed FY guidance including EPS between 72-76 cents and adjusted free cash flow between $900 million and $1.0 billion

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Earnings Call Highlights

The below topics have been answered by CEO Peter Konieczny and CFO Michael Casamento.

Q1 volume performance: “Overall volumes for the fiscal first quarter were up approximately 2%, compared with 1% in Q4 ... Across the balance of the business, overall volumes increased by 4% over the September quarter last year.”

Q1 flexibles volume: "In Flexibles, Q1 volumes were up 3% compared with last year... Destocking in healthcare continued in North America and Europe in pharmaceuticals, resulting in a headwind of approximately 2% to overall segment volumes.”

Q1 rigid packaging volume: “Rigid Packaging saw a 4% decline in volumes compared with last year, driven by continued soft consumer demand in North American beverages and weaker demand in Argentina and Colombia.”

Organic growth drivers: "Our performance through the first quarter further supports our expectations for strong growth in the underlying business for the year as we continue to build on our volume and earnings momentum.

New products: "I've tasked our teams to leverage the early wins we are having with AmFiber to drive more growth from our innovative fiber-based offerings."

Margin performance: “Adjusted EBIT grew by 3% compared with last year … Our teams continue to proactively manage costs while helping drive operating leverage across the business. This resulted in another quarter of margin improvement, with adjusted EBIT margin increasing by 50 basis points to 10.9%.”

Cash flow outlook: “We are affirming our expectations to generate strong adjusted free cash flow in the range of $900 million to $1 billion for the year, supporting our confidence in exiting the year with the leverage back at three times or lower.”

Inventory build: “We increased raw material inventories to ensure we are ready to service improving volume trends. Leverage was a little higher than we were anticipating, given the impact of higher inventories.”

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Analyst Q&A Highlights

Q1 volume growth performance: "Overall company volume performance plus 2%...broadly in line with what we were expecting ... If I look forward into the second quarter, we're definitely expecting another sequential volume improvement in Q2."

What was the rationale for unwinding the Bericap joint venture, and how will it affect Rigid's earnings: "We weren't comfortable with the views of our partner with regards to the amount of capital ... to develop the business going forward ... On an annual basis, we consolidate the revenue and earnings of the joint venture...from an EBIT standpoint, about $19 million."

Current net debt is 3.5x, higher than 3.3x a year ago: "Firstly with leverage of 3 times, we would say that's the peak, and it's a little higher than we were expecting in Q1 we would expect to see and it really is for a couple of reasons. Firstly, as I mentioned in my remarks, we saw some spike in spot FX rates for euro that were higher than we were expecting at the end of the September quarter, which have since come back."

How you're seeing the state of the consumer across your key end markets in both the US and Europe: "I think the consumer is at best flat, if not a little down. And that's very consistent with what we've said in prior calls. And we're not expecting a lot of help from the consumer going forward either."

This article was generated with the support of AI and reviewed by an editor.

 

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