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Amcor reports increased profit

Australian packaging company Amcor announced an interim profit of A$123 million despite a slowdown in parts of the packaging sector in the first-half of 2000-01, a 6.2% increase over the same period a…

Australian packaging company Amcor announced an interim profit of A$123 million despite a slowdown in parts of the packaging sector in the first-half of 2000-01, a 6.2% increase over the same period a year before. Amcor“s managing director, Mr Russell Jones, is pushing hard for his company to be seen as a solid defensive play, with 70% of its business now in non-cyclical areas such as food and beverage packaging. After spinning off its paper business into the separately listed PaperlinX in April 2000, Mr Jones loosened the purse strings to remake the company as a pure packaging group. By exiting the paper business, Amcor cut its exposure to the cyclical swings of global pulp and paper prices and thus stabilised its earnings flow, but economic slowdowns in the United States and Australia two key markets for Amcor will put pressure on margins. Amcor plans to reinstate the dividend reinvestment plan which is expected to produce A$ 60 million to A$ 70 million in fresh funds to add to the A$ 400 million or so of existing capacity earmarked for acquisitions. The overseas contribution to earnings is likely to escalate further with the spotlight on North America and Europe. Amcor has a broad target of becoming one of the world“s top five global packaging players. To achieve this, it would need to increase annual revenues to A$ 9 billion from close to A$ 6 billion now. It cut its dividend payout ratio to about 70% from 80% previously. Mr Jones argued the lower level was more appropriate as Amcor pursued its growth aspirations.

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