Amcor delivers record annual profit spurred by meat, coffee and pet food packaging sales
18 Aug 2021 --- Amcor has announced a record annual profit of US$939 million for the fiscal year 2021, up 53 percent against 2020. The company reported growth in meat, coffee and pet food packaging, offsetting decreased demand for healthcare applications. In North America, full year beverage volumes were 8 percent higher than the prior year with hot-fill container volumes up 13 percent.
The global packaging giant is also forecasting a strong outlook for fiscal 2022 following its transformational acquisition of Bemis.
Amcor’s CEO Ron Delia says the company executed successfully against its strategy, delivered growth and increased EBIT margins while managing “exceptionally well” through steep raw material cost increases and supply constraints.
The company’s full year net sales of US$12,861 million in fiscal 2021 were 2 percent higher than the prior year on a comparable constant currency basis.
“EPS (Earnings Per Share) was 16 percent higher than last year, ahead of our upgraded guidance and we generated Free Cash Flow of US$1.1 billion while increasing capital investments to generate future growth in our most attractive segments,” Delia details.
“The strong cash flow also enabled significant cash returns to shareholders through a higher annual dividend and the repurchase of shares. Across the business, we ended the year with good momentum and we expect another strong year in fiscal 2022.”
The company’s fiscal 2022 outlook has adjusted EPS growth of 7-11 percent on a comparable constant currency basis and Adjusted Free Cash Flow of US$1.1-1.2 billion. It is allocating approximately US$400 million of cash toward share repurchases.
Bemis provides improved foundation
Amcor acquired Bemis through an all-stock transaction in June 2019. “In the two years following our transformational acquisition of Bemis, we have strengthened our financial profile and consistently built earnings momentum,” explains Delia.
“The integration is essentially complete and we will exceed our original US$180 million cost synergy target by at least 10 percent and Free Cash Flow for fiscal 2022 is expected to be almost double pre-acquisition levels.”
“Amcor is now better positioned strategically than ever with global scale, strong innovation capabilities and greater exposure to more attractive, higher growth end markets like healthcare and protein, which offer more potential for differentiation and growth. This improved foundation will enable stronger growth and value creation for all stakeholders into the future.”
Amcor indicates it continued to execute well against overhead, procurement and footprint initiatives and delivered approximately US$75 million (pre-tax) of incremental cost synergies during fiscal 2021. Of this amount, approximately US$65 million was recognized in the Flexibles segment and approximately US$10 million in Other.
Combined with the US$80 million delivered in fiscal 2020, cumulative costs synergies have reached approximately US$155 million.
Key Financials Fiscal 2021.
COVID-19 and regional trends
Amcor reports that its full year flexible segment volume growth of 1 percent reflects strong growth across a range of higher value end markets including meat, coffee and pet food, which was mostly offset by lower volumes in certain healthcare end markets driven by fewer elective surgeries and prescriptions trends during the COVID-19 pandemic.
In North America, low single-digit volume growth for fiscal 2021 was mainly driven by strength in the meat, frozen food and condiments end markets. This was partly offset by lower healthcare, home and personal care volumes.
In Europe, full year volumes were marginally lower than the same period last year with higher volumes in the pet food, cheese and coffee end markets offset by lower healthcare and yogurt volumes.
Full year volumes grew at mid-single-digit rates across the Asian emerging markets, with double-digit growth in both China and India, partly offset by lower volumes in South East Asia. In Latin America, fiscal 2021 volumes grew at low single-digit rates compared with the prior period.
Adjusted EBIT for fiscal 2021 of US$1,427 million was 9 percent higher than the prior period on a comparable constant currency basis. This includes 4 percent organic growth primarily reflecting higher volumes and “outstanding margin management through the year.”
The remaining growth reflects approximately US$65 million of cost synergy benefits related to the Bemis acquisition, the company confirms.
Segment Results Fiscal 2021.
North American beverage demand
In North America, full year beverage volumes were 8 percent higher than the prior year with hot-fill container volumes up 13 percent. Growth was driven by rising consumer demand through the year, resulting in capacity shortages across the industry.
Amcor shares that demand was particularly strong in hot-fill categories including sports drinks, ready-to-drink tea and juice, reflecting higher consumption and new product innovation in categories where “the preferred package format is the PET container.”
Specialty container volumes were also higher than the prior year with good growth in the spirits, home and personal care categories, partly offset by lower healthcare volumes.
In Latin America, full year volumes were 5 percent higher than the prior year with sequential improvement in each quarter. Volumes grew in particular in Brazil and Argentina, partly offset by lower volumes in certain other markets in the region.
2021 Fiscal Year Highlights
- GAAP Net Income of US$939 million, up 53 percent; GAAP EPS of 60.2 cps, up 58 percent;
- Adjusted EPS of 74.4 cps, up 16 percent on a comparable constant currency basis, above guidance range;
- Adjusted Free Cash Flow of US$1.1 billion, at upper end of guidance range;
- Bemis integration completed: financial targets exceeded and stronger foundation for growth: approximately US$75 million of cost synergies in FY21 and expect total to exceed original US$180 million target by at least 10 percent;
- Strong cash returns to shareholders: annual dividend increased to 47.0 cents per share, including 11.75 cents per share declared today. US$350 million shares repurchased in FY21 (approximately 2 percent of outstanding shares);
- Accelerating sustainability agenda and delivery of responsible packaging solutions; and
- Fiscal 2022 outlook: Adjusted EPS growth of 7-11 percent on a comparable constant currency basis and Adjusted Free Cash Flow of US$1.1-$1.2 billion. Allocating approximately US$400 million of cash toward share repurchases.
Edited by Joshua Poole
