Amcor eyes future acquisitions as FY21 financials increase

Amcor is on the lookout for future acquisitions as the company delivers a successful FY21 and completes its Bemis integration in the US.

Amcor CEO Ron Delia said the business would consider acquiring more companies to build on its portfolio of offerings.   

‘‘Without question, we’ll be casting our eyes around and looking for the best opportunities,’’ he said.

“We do believe that we have the best technology in the marketplace but we are also humble to realise that we don’t have all the good ideas out there. So, if there was a product acquisition that would add to our portfolio, we would absolutely do it.

“Our financial profile is solid. With strong annual cash flow and a strong balance sheet, the business has significant capacity and flexibility to invest in organic growth drivers, including sustainability, execute M&A as well as return a significant amount of cash to shareholders.   

“If there is an acquisition that pops up, we would not hesitate for a second to suspend a buyback or continue to fund the funding, which we would comfortably be able to do.”

In its 2021 fiscal year report ending June 2021, Amcor announced a GAAP Net Income of $939 million, up 53 per cent from the previous corresponding period and a GAAP net sales of $12.86 billion, up from $12.46 billion in 2020.

Delia said, “Amcor delivered record full year earnings in 2021, as our teams successfully executed against our strategy, delivered growth and increased EBIT margins while managing exceptionally well through steep raw material cost increases and supply constraints.

“Across the business, we ended the year with good momentum and we expect another strong year in fiscal 2022.”

Within the flexibles sector, which was one of Amcor’s top performing for the financial year, EBIT for fiscal 2021 was $1.427 billion (nine per cent higher than the prior period).

It said full year segment volume growth of one per cent reflects the 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.

Net sales within flexibles included more than $100 million of price increases in the fourth quarter ending 30 June 2021, related to the pass through of higher raw material input costs.

Within the rigid packaging segment, its adjusted EBIT for fiscal 2021 for this segment was $299 million – eight per cent higher than the prior year. It said the positive mix across the business and higher volumes were partly offset by increased labor and transportation costs incurred in North America to service rapidly increasing volume ahead of installing additional capacity.

Delia also provided an update on the company’s Bemis integration, saying that it is now complete with financial targets at approximately $75 million of cost synergies in FY21 and that the total revenue is expected to exceed the original $180 million target by at least 10 per cent.

Of this amount, approximately $65 million was recognised in the flexibles segment.

“In the two years following our transformational acquisition of Bemis, we have strengthened our financial profile and consistently built earnings momentum. The integration is essentially complete and we will exceed our original $180 million cost synergy target by at least 10 per cent and Free Cash Flow for fiscal 2022 is expected to be almost double pre-acquisition levels,” he said.

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