Amcor targets growth in flexibles

The initiatives outlined are focused on the company’s Flexibles segment, which includes Tobacco Packaging, and are designed to accelerate the pace of adapting the organization within developed markets through: footprint optimization, to better align capacity with demand, increase utilization and improve the cost base; and streamlining the organization, particularly in Europe, to enable greater customer focus and speed to market by reducing complexity. These initiatives will likely result in the restructuring or closure of several plants in developed markets, and in lower overhead costs.

Collectively these initiatives are expected to generate a pre-tax return of approximately 35 percent on the cash invested within three years, delivering a profit before interest and tax benefit of 40-50 million USD (profit after tax benefit of 30-40 million USD. The total cash investment is expected to be 120-150 million USD across the 2017 and 2018 financial years.

Details of individual initiatives are being developed, local consultation will occur and announcements will be released at the appropriate time.

As first outlined last year, Amcor is focused on efforts to generate its own growth and more aggressively adapt to changes in the operating environment. ‘We have made good progress in each of these areas,’ the company stated.

Ron Delia, Amcor CEO and managing director, said: ‘Amcor has strong flexible and tobacco packaging businesses in the developed markets with leading market positions which provide a solid platform for future growth. To build on that strong foundation, it is critical we continue to take decisive steps to align the organization with market growth opportunities and customer needs.

‘The initiatives we have announced today are important enablers of our plan to drive greater customer focus and to generate faster organic growth in our Flexibles segment. In addition to reducing complexity and ensuring the cost position of the businesses remains competitive, the cash invested will generate attractive returns. Combined with the benefits from the recent Alusa acquisition, the Flexibles segment is expected to deliver pre-tax earnings growth of more than 100 million USD over the next three years.

‘Importantly, all the elements of our Shareholder Value Creation model will remain unchanged. Amcor will continue to generate strong cash flow and investing in these initiatives will not impact the ability to fund capital expenditure, acquisitions or dividends.’