Amcor reports record full year earnings and strong outlook for fiscal 2022

2021 Fiscal Year Highlights

  • GAAP Net Income of $939 million, up 53%; GAAP earnings per share (EPS) of 60.2 cps, up 58%;
  • Adjusted EPS of 74.4 cps, up 16% on a comparable constant currency basis, above guidance range;
  • Adjusted Free Cash Flow of $1.1 billion, at upper end of guidance range;
  • Bemis integration completed - financial targets exceeded and stronger foundation for growth: approximately $75 million of cost synergies in FY21 and expect total to exceed original $180 million target by at least 10%;
  • Strong cash returns to shareholders: annual dividend increased to 47.0 cents per share, including 11.75 cents per share declared today. $350 million shares repurchased in FY21 (approximately 2% of outstanding shares);
  • Accelerating sustainability agenda and delivery of responsible packaging solutions; and
  • Fiscal 2022 outlook: Adjusted EPS growth of 7-11% on a comparable constant currency basis and Adjusted Free Cash Flow of $1.1-$1.2 billion. Allocating approximately $400 million of cash towards share repurchases.

An outstanding year, exceeding expectations

Amcor's CEO Mr. Ron 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. EPS was 16% higher than last year, ahead of our upgraded guidance and we generated Free Cash Flow of $1.1 billion while increasing capital investments to generate future growth in our most attractive segments. The strong cash flow also enabled significant cash returns to shareholders through a higher annual dividend and the repurchase of shares. Across the business we ended the year with good momentum and we expect another strong year in fiscal 2022."

"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% and Free Cash Flow for fiscal 2022 is expected to be almost double pre acquisition levels. Amcor is now better positioned strategically than ever with global scale, strong innovation capabilities and greater exposure to more attractive, higher growth end markets like healthcare and protein which offer more potential for differentiation and growth. This improved foundation will enable stronger growth and value creation for all stakeholders into the future."

Key Financials(1)

Twelve Months Ended June 30,

GAAP results

2020

$ million

2021 $ million

Net sales

12,468

12,861

Net income

612

939

EPS (diluted US cents)

38.2

60.2

Twelve Months Ended June 30,

Comparable

Adjusted non-GAAP results

2020

$ million

2021

$ million

Reported ∆%

constant

currency ∆%

Net sales(2)

12,468

12,861

3

2

EBITDA

1,913

2,028

6

6

EBIT

1,497

1,621

8

8

Net income

1,028

1,158

13

13

EPS (diluted US cents)

64.2

74.4

16

16

Free Cash Flow (before dividends)

1,220

1,099

  1. Adjusted non-GAAP results exclude items which are not considered representative of ongoing operations. Comparable constant currency ∆% excludes the impact of movements in foreign exchange rates and items affecting comparability. Further details related to non-GAAP measures and reconciliations to GAAP measures can be found under "Presentation of non-GAAP information" in this release.
  2. Comparable constant currency ∆% for net sales excludes a 2% favorable currency impact and a 1% unfavorable impact from items affecting comparability. There was no material impact from the pass through of raw material costs on comparable constant currency ∆% for net sales.
    Note: All amounts referenced throughout this document are in US dollars unless otherwise indicated and numbers may not add up precisely to the totals provided due to rounding.

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Bemis cost synergies

The Bemis Company was acquired through an all-stock transaction in June 2019.

Amcor continued to execute well against overhead, procurement and footprint initiatives and delivered approximately $75 million (pre-tax) of incremental cost synergies during fiscal 2021. Of this amount, approximately $65 million was recognized in the Flexibles segment and approximately $10 million in Other.

Combined with the $80 million delivered in fiscal 2020, cumulative costs synergies have reached approximately $155 million. Amcor expects to exceed the original target of $180 million by the end of fiscal 2022 by at least 10%.

Cash Returns to Shareholders

Amcor generates significant and growing Free Cash Flow, maintains strong credit metrics and is committed to an investment grade credit rating. This annual Free Cash Flow provides substantial capacity to simultaneously reinvest in the business, pursue acquisitions and return cash to shareholders through a compelling and growing dividend as well as share repurchases.

Dividend

The Amcor Board of Directors today declared a quarterly cash dividend of 11.75 cents per share. Combined with the last three quarterly dividends, this increases the annual dividend for fiscal 2021 to 47.0 US cents per share. The quarterly dividend declared today will be paid in US dollars to holders of Amcor's ordinary shares trading on the NYSE. Holders of CDIs trading on the ASX will receive an unfranked dividend of 15.93 Australian cents per share, which reflects the quarterly dividend of 11.75 cents per share converted at an average AUD:USD exchange rate of 0.7374 over the five trading days ended August 10, 2021.

The ex-dividend date will be September 7, 2021, the record date will be September 8, 2021 and the payment date will be September 28, 2021.

Share repurchases

$350 million was used to repurchase shares in fiscal 2021 which reduced the total number of shares issued and outstanding by approximately 2%.

Amcor expects to allocate approximately $400 million of cash towards share repurchases in the 2022 fiscal year.

2021 financial results

Segment Information

Twelve Months Ended June 30, 2020

Twelve Months Ended June 30, 2021

Adjusted non-GAAP

Net sales

EBIT

EBIT /

EBIT / Average

Net sales

EBIT

EBIT /

EBIT / Average

funds employed

funds employed

results(1)

$ million

$ million

Sales %

%(2)

$ million

$ million

Sales %

%(2)

Flexibles

9,755

1,296

13.3

10,040

1,427

14.2

Rigid Packaging

2,716

284

10.4

2,823

299

10.6

Other

(3)

(83)

(2)

(105)

Total Amcor

12,468

1,497

12.0

14.0

12,861

1,621

12.6

15.4

  1. Adjusted non-GAAP measures exclude items which are not considered representative of ongoing operations. Further details related to non- GAAP measures and reconciliations to GAAP measures can be found under "Presentation of non-GAAP financial information" and in the tables included in this release.
  2. Average funds employed includes shareholders equity and net debt, calculated using a four quarter average and Last Twelve Months adjusted EBIT.

Full year net sales for the Amcor Group of $12,861 million were 2% higher than the prior year on a comparable constant currency basis. Overall volumes were 2% higher than the prior year and price/mix had no material impact on net sales.

EBIT margins increase by 60 basis points to 12.6% and return on average funds employed of 15.4% increased by 140 basis points compared with the prior year.

2

Flexibles

Twelve Months Ended June 30,

Reported

Comparable

2020

$ million

2021

$ million

constant

∆%

currency ∆%

Net sales(1)

9,755

10,040

3

-

Adjusted EBIT

1,296

1,427

10

9

Adjusted EBIT / Sales %

13.3

14.2

  1. Comparable constant currency ∆% for Net sales excludes a 2% favorable currency impact, a 1% unfavorable impact from items affecting comparability (disposed businesses) and a 1% favorable impact from the pass though of raw material costs.

Net sales includes 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.

Full year net sales on a comparable constant currency basis were marginally higher than the prior period with 1% higher volumes partially offset by price/mix.

Full year segment volume growth of 1% reflects 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.

In North America, low single digit volume growth for fiscal 2021 was mainly driven by strength in the meat, frozen food and condiments end markets. This was partly offset by lower healthcare, home and personal care volumes.

In Europe, full year volumes were marginally lower than the same period last year with higher volumes in the pet food, cheese and coffee end markets offset by lower healthcare and yogurt volumes.

Full year volumes grew at mid-single digit rates across the Asian emerging markets, with double digit growth in both China and India, partly offset by lower volumes in South East Asia. In Latin America, fiscal 2021 volumes grew at low single digit rates compared with the prior period.

Adjusted EBIT for fiscal 2021 of $1,427 million was 9% higher than the prior period on a comparable constant currency basis. This includes 4% organic growth primarily reflecting higher volumes and outstanding margin management through the year. The remaining growth reflects approximately $65 million of cost synergy benefits related to the Bemis acquisition.

Adjusted EBIT margin expanded by 90 basis points to 14.2% compared with the prior year.

Rigid Packaging

Twelve Months Ended June 30,

Reported

Comparable

2020

$ million

2021

$ million

constant

∆%

currency ∆%

Net sales(1)

2,716

2,823

4

8

Adjusted EBIT

284

299

6

8

Adjusted EBIT / Sales %

10.4

10.6

  1. Comparable constant currency ∆% for Net sales excludes a 3% unfavorable impact from the pass through of raw material costs and a 1% unfavorable currency impact.

Full year net sales on a comparable constant currency basis were 8% higher than the prior year. Overall volumes were 5% higher than the prior period with broad growth across North America and Latin America, and price/mix had a 3% favorable impact which includes pricing to recover cost inflation in Latin America.

In North America, full year beverage volumes were 8% higher than the prior year with hot fill container volumes up 13%. Growth was driven by rising consumer demand through the year which resulted in capacity shortages across the industry. Demand was particularly strong in hot fill categories including sports drinks, ready to drink tea and juice reflecting higher consumption and new product innovation in categories where the preferred package format is the PET container. Specialty container volumes were also higher than the prior year with good growth in the spirits, home and personal care categories, partly offset by lower healthcare volumes.

In Latin America, full year volumes were 5% higher than the prior year with sequential improvement in each quarter. Volumes grew in particular in Brazil and Argentina, partly offset by lower volumes in certain other markets in the region.

Adjusted EBIT for fiscal 2021 of $299 million was 8% higher than the prior year in comparable constant currency terms. 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.

3

Other

Twelve Months Ended June 30,

Adjusted EBIT

2020

$ million

2021

$ million

Equity earnings in affiliates, net of tax

12

3

Corporate expenses

(95)

(108)

Total Other

(83)

(105)

Net interest and income tax expense

Combined net interest and adjusted tax expense were broadly in line with last year. Net interest expense for the twelve months ended June 30, 2021 was $139 million compared with $185 million in the same period last year, with the decrease primarily driven by lower interest rates on floating rate debt. Offsetting this, adjusted tax expense for the twelve months ended June 30, 2021 (adjusted to exclude amounts related to non-GAAP adjustments) was $313 million compared with $276 million in the same period last year. Adjusted tax expense represents an effective tax rate of 21.1% in the current period (21.0% in the same period last year).

Free Cash Flow

Adjusted Free Cash Flow for fiscal 2021 was $1,099 million. This is lower than the prior year as higher EBITDA growth was offset by the adverse impact from the timing of tax payments and a lower working capital benefit compared with fiscal 2020 when the business released more than $200 million of cash from working capital following the Bemis acquisition. Working capital performance remained strong through fiscal 2021 with Amcor's twelve month average working capital to sales ratio decreasing to 8%.

Balance sheet

Net debt was $5,439 million at June 30, 2021, and leverage, measured as net debt divided by adjusted trailing twelve month EBITDA was 2.7 times.

Fiscal 2022 guidance

Amcor's guidance contemplates a range of factors, however the COVID-19 uncertainty and additional complexity when estimating future financial results. June 2022, the Company expects:

pandemic creates higher degrees of For the twelve month period ending 30

  • Adjusted EPS growth of approximately 7 to 11% on a comparable constant currency basis, or approximately 79.0 to 81.0 cents per share on a reported basis assuming current exchange rates prevail through fiscal 2022.
  • Adjusted Free Cash Flow of approximately $1.1 to $1.2 billion.
  • Approximately $400 million of cash to be allocated towards share repurchases.

While Amcor's business is expected to continue demonstrating resilience given it plays an important role in the supply of essential consumer goods, the level of earnings and Free Cash Flow generated across the business could be impacted by COVID-19 related factors such as the extent and nature of any future operational disruptions across the supply chain, government imposed restrictions on consumer mobility and the pace of macroeconomic recovery in key global economies. The ultimate magnitude and duration of the pandemic's impact on the Company's business remains uncertain at this time.

4

Conference Call

Amcor is hosting a conference call with investors and analysts to discuss these results on Tuesday August 17, 2021 at 5:30pm US Eastern Daylight Time / Wednesday August 18, 2021 7:30am Australian Eastern Standard Time. Investors are invited to listen to a live webcast of the conference call at our website, www.amcor.com, in the "Investors" section.

Those wishing to access the call should use the following toll-free numbers, with the Conference ID 1892522:

  • US & Canada - 866 211 4133
  • Australia - 1800 287 011
  • United Kingdom - 0800 051 7107
  • Singapore - 800 852 6506
  • Hong Kong - 800 901 563

From all other countries, the call can be accessed by dialing +1 647 689 6614 (toll).

A replay of the webcast will also be available on www.amcor.com following the call.

About Amcor

Amcor is a global leader in developing and producing responsible packaging for food, beverage, pharmaceutical, medical, home and personal-care, and other products. Amcor works with leading companies around the world to protect their products and the people who rely on them, differentiate brands, and improve supply chains through a range of flexible and rigid packaging, specialty cartons, closures, and services. The company is focused on making packaging that is increasingly light-weighted, recyclable and reusable, and made using an increasing amount of recycled content. Around 46,000 Amcor people generate $13 billion in annual sales from operations that span about 225 locations in 40-plus countries. NYSE: AMCR; ASX: AMC

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Contact Information

Investors

Tracey Whitehead

Damien Bird

Head of Investor Relations

Vice President Investor Relations

Amcor

Amcor

+61 3 9226 9028

+61 3 9226 9070

tracey.whitehead@amcor.com

damien.bird@amcor.com

Media - Australia

Media - Europe

Media - North America

James Strong

Ernesto Duran

Daniel Yunger

Head of Global Communications

Citadel-MAGNUS

Amcor

Kekst CNC

+61 448 881 174

+41 78 698 69 40

+1 212 521 4879

jstrong@citadelmagnus.com

ernesto.duran@amcor.com

daniel.yunger@kekstcnc.com

Amcor plc UK Establishment Address: 83 Tower Road North, Warmley, Bristol, England, BS30 8XP, United Kingdom

UK Overseas Company Number: BR020803

Registered Office: 3rd Floor, 44 Esplanade, St Helier, JE4 9WG, Jersey

Jersey Registered Company Number: 126984, Australian Registered Body Number (ARBN): 630 385 278

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Amcor plc published this content on 17 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 August 2021 20:23:17 UTC.