Australian packaging company Amcor Ltd warned 27 April 2005 that weakening global economic conditions were making it more difficult to reach its profit growth target of 20% over two years, although th…
Australian packaging company Amcor Ltd warned 27 April 2005 that weakening global economic conditions were making it more difficult to reach its profit growth target of 20% over two years, although the figure remained achievable. Amcor said its net profit before significant items for the nine months to 31 March 2005 was up 5% on the previous corresponding period, after a flat 3Q. No specific earnings or profit figures for the period in question were provided. Amcor executive chairman Chris Roberts said the result for the nine months was “very solid” given that it was achieved in a “fairly tough environment” where the cost of raw materials had risen considerably. Sales of packaging to Australian exporters had been hit by the slow down in exports resulting from the high value of the Australian dollar, while the lingering effects of the drought had also affected meat, fruit and vegetable producers for whom Amcor provides packaging. “The achievement of 20% profit growth over two years remains a target, however realistically it is becoming a more difficult task,” Mr Roberts said. Chief operating officer Louis Lachal said the company would not give a full year profit forecast but said the target of a 20% profit increase over two years was probably a “bit back-end loaded”. In the nine months, cost increases for raw materials, mainly resulting from higher oil prices, were over USD 750 million on an annualised basis. Amcor said the build-up into the summer period had started well, with signs that volumes for the seasonally strong 4Q would be in line with expectations in the United States and Europe. But Amcor Australasia, which makes plastic, metal, fiber and glass packaging throughout Australia and New Zealand, had experienced slowing growth which would adversely affect full year earnings. “There is evidence of an economic slowdown in some sectors that appears to be continuing into the 4Q and will mean that the full year earnings for the Australasian business are likely to be lower than anticipated at the half year result,” the company said. The Amcor Flexibles business also had a difficult period due to raw material cost increases while the Sunclipse unit experienced a delay in passing on higher costs. The other three businesses, Amcor Rentsch, Amcor Closures and Amcor Asia, all traded in line with expectations set out in the 1H result. Amcor said the Australian Competition and Consumer Commission and the New Zealand Competition Commission were continuing their investigations into allegations of price-fixing in the packaging industry. “The ACCC and NZCC continue their investigations and the company is unaware of when any proceedings will commence,” Mr Roberts said. “At this stage the company is unable to make any comment on the matter.” Amcor also said it is also close to finding a new managing director, with an announcement expected by the end of May 2005. Amcor said in February 2005 that 2H earnings for most of its key businesses should exceed the 1H. Amcor posted a net profit of AUD 190.1 million for the six months to 31 December 2004, down 11.4 %. However, pre-significant items, net profit was up 6.2% to AUD 199.4 million.