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2007-02-20 News Release
AMCOR financials and
EU PET Packaging divestment
Sound operating cash flow for AMCOR with plans to divest PET Packaging
and restructure the Flexibles operations in Europe.
Amcor announces that profit after tax and before significant items was
$185 million for the half year ended 31 December 2006. The half year dividend
remained unchanged at 17 cents per share.
Find Information and Suppliers of flexible
packaging.
The company generated a sound operating cash flow for the half of $124.6
million. Significant items after tax were a net loss of $67 million.
As a result of completing strategic reviews of both the PET Packaging
and Flexibles operations in Europe, it has been decided to proceed with
divestment options for the PET Packaging business, and to undertake a
comprehensive restructuring of the flexibles operations, the full details
of which will be announced in April.
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AMCOR Heat Set PET Bottles.
Click
Go for larger image. photo: AMCOR |
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In addition, the company also announced it will build a new €26
million flexibles plant in Poland, specifically dedicated to a large multinational
customer, as well as a new €12 million tobacco packaging plant in
the Ukraine. |
Amcor’s Managing Director and CEO, Mr Ken MacKenzie, said, “As
part of The Way Forward agenda a detailed review of all businesses in
the portfolio was undertaken.
“The growth markets that have been confirmed are flexibles and tobacco
packaging in emerging markets, custom PET containers in North America,
and some select market segments in Australasia.
“Today’s announcement of a new flexibles plant in Poland,
serving one of the fastest growing food categories in Eastern Europe,
is a clear fit with the company’s regional growth aspirations. The
returns from this €26 million investment are supported by a long
term supply agreement.
“The tobacco packaging plant in the Ukraine involves a €12
million investment in one of the largest tobacco producing countries in
Europe. Following the period of extended success the business has achieved
in Poland and Russia, this investment is the next logical step in the
company’s Eastern European development.
“Following a strategic review of the PET Packaging business in Europe,
it has been concluded that there are a number of attractive growth opportunities
across the region, however it is clear that the PET industry in Europe
is poised for rationalization and consolidation.
“Amcor has prioritised its growth opportunities and has decided
that it is not able to fund its global growth plans and also lead the
European PET consolidation process through acquisition. Therefore, we
have decided to sell part, or all, of the European PET business.
“This process has already commenced and is expected to be completed
during the next six months.
“A similar review has been undertaken of the European flexibles
operations. The key finding from this review was the opportunity to better
align the manufacturing footprint with customer needs and market trends
while, at the same time, increasing the focus on the lower cost regions
of Southern and Eastern Europe. Although the review is substantially complete,
we must review the outcomes with our key stakeholders and the specific
details of the restructuring will be communicated in April.
“This announcement substantially complete the major portfolio review
process. When the implementation phase is complete, it is anticipated
that total asset sales will be around $1 billion, more than 10 plants
will have closed, and substantial turnarounds implemented in the Mexican
PET packaging, European flexibles, and Australasian fibre operations.
“As a result of these changes, Amcor will be a more focused company
in terms of product and market segments, and will have geographically
re-weighted the portfolio. In 2005, 32% of sales were in Western Europe
and this will be reduced to around 20% by 2009. In emerging markets, sales
will increase from 12% to around 20% over the same time frame.
“Although the portfolio review, as envisaged in August 2005, is
now substantially announced, Amcor will continue to look for opportunities
to grow and strengthen the portfolio.
“The result for the half year was a solid performance across most
of the business units, and was achieved in a difficult environment of
rising input cost pressures.
“The cost index for the basket of raw materials purchased reached
record highs in September and October. Against a backdrop of falling oil
prices, this made obtaining full recovery from customers in a timely manner
particularly challenging. Notwithstanding this, the businesses collectively
managed to recover the vast majority of the increases, albeit with some
lag.
“The fibre business in Australia substantial impact on earnings.
“These lower volumes were driven by two events. First, the impact
on the banana crop from Cyclone Larry and second the loss of a large customer
in New Zealand at the end of the 2005 calendar year.
“Although absolute volumes were lower, the business maintained its
market share in Australia throughout the 2006 calendar year.
“Amcor Sunclipse, the US distribution business, had a particularly
strong half year with earnings up 19%. This is a result of a program implemented
to improve operating efficiencies and recover cost increases in the market.
“For the second half of the year, Amcor’s input costs will
continue to be substantially higher than a year ago, and there will be
a more significant impact on volumes from the drought in Australia. Notwithstanding
these factors, earnings are expected to be higher than the second half
of last year.
“The benefits from The Way Forward program, which is a three year
‘get fit’ agenda will become increasingly evident over the
coming 18 to 24 months. It is the right program at the right time for
Amcor, and will deliver substantial benefits over the medium term.”
Find information about AMCOR
Limited.
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