Amcor Limited (AMC) said during the first quarter of fiscal 2009 some of its businesses had been impacted by difficult global economic conditions resulting in lower than anticipated volumes. However, the packaging company said the weakening of the Australian dollar would deliver a significant benefit in its reported earnings.

In an address to shareholders at the company's annual general meeting in Melbourne, managing director Ken MacKenzie said Amcor derived around 80% of its earnings offshore, mostly in North America and Europe.

He said Amcor’s businesses predominately supplied the food, beverage and healthcare markets and were relatively defensive in times of slowing economic conditions.

”Our sensitivity to the movement in the Australian dollar is approximately $3 million of additional profit after tax for every 1c downward movement against the US dollar and approximately $2 million of additional profit after tax for every 1c downward movement against the euro,” Mr MacKenzie said.

Mr MacKenzie also noted that the recent fall in the oil price would have a positive benefit in the medium term via reducing input costs.

”Amcor is transitioning into a new phase of development,” he said. 

Mr MacKenzie said Amcor's business improvement program, 'The Way Forward', had had a positive effect on the earnings of continuing businesses over the past three reporting periods.

Looking at individual businesses Mr MacKenzie said in the PET Packaging operations, volumes for the custom container business for the first quarter were slightly higher than the same period last year.

”The business continues to reduce it’s exposure to the carbonated soft drink and water segments and, consistent with this strategy, volumes in these segments were lower,” Mr MacKenzie said.

“Across the North American beverage segment, customers had a strong inventory build going into the summer period.”

Mr MacKenzie said beverage sales, however were lower than anticipated through the period due to a combination of cooler weather conditions and a slowing economy.

”This resulted in the industry reducing inventories during the first quarter,” he said.

Mr MacKenzie said given the current economic slowdown in the US the demand for custom containers over the next six months was hard to forecast and, consequently, it was difficult to give earnings guidance for the PET operations.

In Amcor Australasia, the non-fibre businesses continued to perform satisfactorily, however he said volumes were variable across a number of the product segments.

”In particular, the ‘ready to drink’ beverage can segment has experienced sharply lower volumes due to the introduction of new taxes on pre-mixed alcoholic beverages,” Mr MacKenzie said.

In the fibre business, a 12% corrugated box price increase had been announced to recover substantially higher input costs incurred over the past three years.

These input cost increases have totalled more than $70 million with the majority having been incurred in the second half of last year, he said.

”With the price increase being implemented in the second quarter there will be significant under-recovery of the higher input costs in the first half of the year,” Mr MacKenzie said. 

”This position will improve in the second half of the year.”

He said as a result of the under-recovery the Australasian earnings would be lower in the first half of the year.

At 1430 AEDT, Amcor was trading down 34c or 6% at $5.30.