Australian global packaging company Amcor Ltd recently said that its new European businesses were on target to achieve cost reductions and synergy benefits of A$ 70 million over three years.
In April…
Australian global packaging company Amcor Ltd recently said that its new European businesses were on target to achieve cost reductions and synergy benefits of A$ 70 million over three years. In April, Amcor had announced plans to merge its European flexibles business with Danisco Flexible and the majority of the operations of Akerlund & Rausing to form Amcor Flexibles Europe. Amcor said the new company, with 40 plants in 14 countries and sales of around A$ 1 billion, would be the new market leader in flexible packaging in Europe, with Amcor having 67% ownership and management control. Amcor managing director Russell Jones said a 100-day plan was implemented to look at all aspects of the operations and identify areas to reduce costs, improve operating efficiencies and enhance customer service. Jones said the initial intention was to consider the closure of four plants and rationalization of at least three others across Europe. He added that the restructuring of the sales and administration functions was already underway and was expected to result in the closure of a significant number of sales and administration offices. The business restructuring could result in a 15% reduction of staff and employee numbers in Amcor Flexibles Europe. According to Jones, sales volumes across the business will remain solid with overall volumes for the first two months ahead of budget and higher than in the same period last year. “Significant progress has been made in confirming the areas of cost reductions and synergy benefits and Amcor is on schedule to achieve benefits at the targeted levels of A$ 70 million over three years and A$ 28 million in the first year,” Jones said. “We are extremely pleased with the progress made so far. After a detailed examination of all aspects of the operation it is apparent that the benefits anticipated are obtainable and that the target of a 15% return on funds employed by the third year is achievable. We understand that there is a significant amount of work to be undertaken in the coming months and expect that the benefits from these efforts will start to emerge in the second-half result. As the European market leader in flexible packaging, the business is well positioned to further enhance its product offering by establishing product leadership in a number of key market segments.” Amcor remains confident that the impact of the European merger will be earnings-per-share positive in the current year, although most of the benefits from the restructuring program will accrue in the second half.