Amcor raises outlook on panic buying spree
Amcor has raised its full year earnings per share outlook, as it released robust third quarter profits it said were due to virus-induced supermarket panic buying.
The world's biggest packaging company now expects to pay a dividend of between 11-12 per cent per share, up from 7-10 per cent on the back of increased production at its 250 plants around the world, all deemed an essential service.
Almost all Amcor's packaging customers are in consumer staples of food, beverage and healthcare, which are in increased demand around the world. Amcor CEO Ron Delia said almost everything the company packages is for home consumption, saying the company had powered through the Covid crisis.
Amcor's net income from the nine months to March rose 10.8 per cent to US$719m ($1.1bn), but was 12.7 per cent higher in constant currency terms which removes the effect of foreign exchange fluctuations.
Net sales for the nine months were down 1.8 per cent in constant currency terms to US$9.3bn ($14 billion). Flexibles contributed US$7.28m, while rigid packaging brought in $2.04bn.
Delia said, “While we are not immune from the current challenges, Amcor remains relatively well positioned and defensive, given our sales are almost entirely weighted to essential consumer staples end markets, and we have broad geographic diversification and global scale.
“For the second consecutive quarter we have increased guidance for the 2020 fiscal year. Earnings growth has remained strong due to momentum in the base business, and faster than expected synergies from our acquisition of Bemis last year. Amcor continues to deliver consistent cash flow and the Board remains committed to a compelling dividend.”
Amcor's stock price fell by 30 per cent as the virus spread in March, but since recovered, and is now trading less ten per cent lower than three months ago, and above its $14 target.
The company said its acquisition of US packaging giant Bemis which it acquired in June last year had delivered US$55m in pre-tax synergies so far.