Amcor Limited (AMC) said its first half profit after tax and significant items fell 29.5% to $108.5 million. The group said it operated in the defensive product segments of food and beverages with relatively resilient underlying demand despite weaker economic conditions.
The company noted that its bottom line reflected significant items with a loss of $58.9 million. Amcor said this was primarily related to a planned restructuring.
Profit after tax and before significant items $167.4 million, was down 9.5%, while profit before interest and tax was down 2.9% for continuing businesses.
In announcing the result, Amcor's managing director and CEO Ken MacKenzie said the first half result reflects the defensive nature of many of its businesses, combined with the benefit from translating overseas earnings into Australian dollars at a lower average exchange rate.
He said the Flexibles business had a strong half with earnings up 15.7%, in local currency terms.
''Within this segment, the food and healthcare operations successfully recovered rising raw material costs and the restructuring program in Western Europe progressed on schedule,'' Mr MacKenzie said.
He added that the tobacco packaging operations had an excellent half.
''The new plant in the Ukraine continued to increase production and the new investments in Poland and Russia delivered the anticipated improvements,'' he said.
Mr MacKenzie said the PET packaging operations had a solid half with its operating performance partially offsetting the impact from lower volumes.
''During the first quarter, there was significant destocking in the supply chain that adversely impacted volumes,'' he explained.
''Since the end of October, volumes have more closely reflected underlying demand, particularly in the case of the higher value-add custom products.''
Mr MacKenzie added that in Australia and New Zealand, the glass wine bottle operations delivered another strong result.
He said the $150 million investment in a third furnace would increase Amcor's capacity at the plant to 600 million wine bottles per year and is supported by long term customer supply arrangements.
Meanwhile, a $230 million investment in a new recycled paper mill to be located at Botany NSW will result in a mill a capacity of 345,000 tonnes per annum.
In regards to other growth prospects, Amcor noted that it was in discussions with Rio Tinto Limited (RIO) on the possible purchase of part, but not all, of the Alcan Packaging business.
However, Mr MacKenzie noted that it was uncertain at this point if the company would proceed to purchase any of the Alcan Packaging assets.
''Any decisions relating to funding will be made once we know what assets, if any, we are purchasing,'' he said.
''As stated previously, we are a patient and disciplined buyer of any assets and have previously walked away from acquisitions where asset prices were too high.''
Looking to the second half, the company said earnings should benefit substantially from a combination of a weaker Australian dollar and lower costs for a number of key raw materials.
''These factors, together with the relatively defensive nature of the product segments we operate in, will help insulate earnings from the impact of any further weakening in economic conditions,'' the group said.
The company said its interim dividend remained constant at 17c per share.
At 1035 AEDT, Amcor shares were down 4c to $5.06.
