Packaging giant Amcor saw its Australian flexibles business achieve “strong growth” in the first quarter of the new financial year, as the company achieved positive results in all areas, bar China.
The world’s biggest packaging business, which originated in Melbourne, and is now based in the US, saw its sales rise by nine per cent in the quarter, to US$3.7bn (A$5.8bn), with an adjusted EBIT also up by nine per cent, to US$392m (A$620m).
The company successfully pushed through price rises onto its customers, adding some US$400m to its invoices in the quarter, as it passes on rapidly rising raw materials costs. It pushed its flexibles prices up by 10 per cent in the quarter, and its rigids prices by 17 per cent.
Volumes were a smidge lower, with its 225 factories around the world selling 0.6 per cent less product, mainly as a result of China’s incessant lockdowns impacting sales.
Amcor CEO Ron Delia said that in these challenging times the company has benefitted from its product range, used to package staples the world over, and from its determination to pass on rising input costs. Amcor’s size and market power gives its customers little option but to accept the rises, which are inevitably passed onto the consumer at the supermarket checkout.
Delia said, “The result demonstrates the relative stability of our end market exposures, our relentless focus on recovering higher raw material costs and general inflation, and our proactive approach to driving costs out of the business. Our consistent execution has enabled us to generate strong organic earnings growth in a volatile and challenging operating.”
India, Australia and Asia were cited as standout performers in the flexibles business. Flexibles overall achieved an adjusted EBIT of $353m, which is 11 per cent higher than the same quarter last year on a comparable constant currency
basis, reflecting, says Amcor, overall net sales growth, ongoing management of inflation and strong cost performance.
Delia pointed to both divisions contributing to the growth, he said, “Amcor delivered a strong first quarter highlighted by solid operating leverage with three per cent organic sales growth driving a 10 per cent increase in adjusted earnings per share on a comparable constant currency basis. Both the Flexibles and Rigid Packaging segments contributed to adjusted EBIT growth of 9 per cent on a comparable constant currency basis.”
Looking to the rest of the year, Amcor is expecting overall growth of between three and eight per cent. This includes an expected two per cent hit from the planned exit of its business in Russia, where it has three plants, with a sale process underway.
