Amcor(AMCR) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EPS for Q1 2026 was $0.193, an 18% increase compared to the previous year, exceeding the midpoint of guidance [6][10] - EBIT for the quarter was $687 million, up approximately 4% on a comparable basis, with an EBIT margin of 12%, which is 110 basis points higher than last year [11][10] - Free cash outflow for Q1 was $343 million, representing a year-over-year improvement of over $160 million prior to acquisition-related costs [20] Business Line Data and Key Metrics Changes - In the global flexible packaging solutions segment, net sales increased by 25% on a constant currency basis, primarily due to the Berry acquisition, but were down 2% on a comparable basis [16] - Adjusted EBIT for the flexible packaging segment rose 28% on a constant currency basis to $426 million, driven by acquired earnings [17] - In the global rigid packaging solutions segment, net sales increased by 205% on a constant currency basis, with adjusted EBIT of $295 million, a 365% increase [19] Market Data and Key Metrics Changes - Emerging markets performed better than developed markets, with solid growth in Asia, while volumes in developed markets were down low single digits [10][16] - Demand in North America and Europe was down low single digits, with specific weakness noted in the unconverted film category in Europe [16][35] Company Strategy and Development Direction - The company is focused on delivering core business execution, integrating Berry, realizing synergies, and optimizing its portfolio [7][9] - The board approved an increase in the quarterly dividend to $0.13 per share, reflecting a commitment to shareholder returns [9][30] - Strategic initiatives include defining the core portfolio, exploring alternatives for non-core assets, and leveraging combined capabilities for growth [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering at least $260 million in synergies in Fiscal 2026, independent of macroeconomic improvements [9][30] - The company anticipates strong earnings and cash flow growth, with EPS growth guidance reaffirmed at 12%-17% for the fiscal year [22][30] - Management acknowledged challenges in consumer affordability impacting certain categories, particularly in Europe [35][42] Other Important Information - The company has identified opportunities for improvement in safety metrics, with 89% of combined sites injury-free in Q1 [7] - The transition of CFO Michael Casamento to an advisory role was noted, with Steve Sugar set to join as the new CFO [13][14] Q&A Session Summary Question: Concerns about volume decline in flexible business - Management noted that volumes were expected to be similar to Q4, with specific weakness in the unconverted film category in Europe due to general market softness [35][36] Question: Update on North American beverage business - Management reported good operational progress, with profitability increased sequentially despite volume softness, and ongoing exploration of strategic alternatives for the non-core business [38][39] Question: Volume performance in high-growth categories - Focus categories generally performed better than the overall business, with strong growth in pet care and dairy, while some categories like meat faced challenges [41][42] Question: Synergy benefits from combining businesses - Management highlighted strong synergy delivery and confidence in achieving at least $260 million in synergies, with ongoing momentum in the pipeline [51][52] Question: Update on private label exposure - Management acknowledged underrepresentation in private label markets and identified it as a focus area for future growth [75][76] Question: Prospects for healthcare business - Management expressed optimism for continued improvement in the healthcare segment, particularly in North America, while noting flat performance in Europe [80]