Amcor is to demerge its Australasia and Packaging Distribution (AAPD) business in order to allow each company to better pursue their own growth agendas and strategic priorities.
AAPD supplies a range of packaging products to companies across Australia and New Zealand, with interests in fiber-based packaging, beverage cans and glass containers. It also distributes packaging in North America.
AAPD’s 2012 sales were led by fiber, which accounted for 40 percent of the AUS$2.8 billion reported in the business unit's full-year results, with Australia soaking up 57 percent of sales by region. North America accounted for 33 percent.
Post-demerger, Amcor will have a global footprint focused on flexible and rigid plastics, while AAPD will be a regional operation with interests in the distribution of fiber, metal and glass packaging. AAPD will also be given a new, as-yet unknown, corporate identity.
In 2006, AAPD was involved in nine packaging market segments, but this will be reduced to four once the divestment occurs. As part of this corporate realignment, a number of AAPD production sites will be closed.
Amcor’s post-demerger organization will include: the Flexibles Europe & Americas business, operating 68 plants in 21 countries; Flexibles Asia Pacific, with 30 plants in seven countries; Rigid Plastics, with 61 plants in 13 countries; and Tobacco Packaging, with 23 plants in 19 countries.
Amcor’s 2012 sales were split 65-35 percent in favor of flexible packaging over rigids, with Western Europe and North America accounting for a similar volume of sales (36 and 33 percent respectively), and emerging markets soaking up 27 percent of sales.
Following the demerger, expected by the end of the year, each company will have its own experienced management team and board. For Amcor, Graeme Liebelt will be the chairman and Ken MacKenzie will remain the managing director and chief executive officer (CEO).
For the new company, Chris Roberts will become the chairman, and Nigel Garrard, the current president of AAPD, will be appointed CEO. John Pizzey and Jeremy Sutcliffe will also join the board of the new company.
Roberts and Pizzey will retire from the board of Amcor upon implementation of the demerger and Jeremy Sutcliffe will continue as a director of Amcor. Both Amcor and the new company will be listed on the Australian Securities Exchange.
Amcor chief executive officer and managing director Ken MacKenzie said: ‘To be a successful market leader, that delivers continuous improvement in customer value, a company must be focused in terms of product portfolio and end markets.
‘Although Amcor and AAPD are both packaging companies they are actually very different in terms of product segments and geographic focus. Amcor has global leadership positions in the flexibles and rigid plastics segments, while AAPD operates in the fibre, glass and beverage can packaging markets in Australasia and packaging distribution in North America and Australia.
‘Over the past six years, Amcor has invested significantly in AAPD to improve its manufacturing capabilities and ensure it is well positioned for growth. These investments have been in excess of AUS$1 billion over that period and include the new recycled paper mill at Botany, a new furnace at the glass bottle plant at Gawler and a new beverage can line in New Zealand.
‘AAPD will continue to benefit from these initiatives in terms of earnings and cash flow.’