10-QPeriod: Q2 FY2024

Amcor plc Quarterly Report for Q2 Ended Dec 31, 2023

Filed February 7, 2024For Securities:AMCRAMCCF

Summary

Amcor plc's (AMCR) Form 10-Q for the quarter ended December 31, 2023, indicates a challenging operating environment, with net sales declining year-over-year for both the three-month and six-month periods, primarily driven by lower volumes across its Flexibles and Rigid Packaging segments. While gross profit margin showed an improvement, overall net income attributable to Amcor plc saw a significant decrease, largely due to the non-recurrence of a substantial gain from the sale of its Russian business in the prior year, alongside increased restructuring costs and higher interest expenses stemming from rising interest rates. The company is actively managing these headwinds through pricing initiatives, cost control measures, and ongoing restructuring efforts, including the 2023 Restructuring Plan aimed at offsetting divested earnings and improving efficiency. Despite the softer demand, Amcor plc maintains a strong liquidity position, supported by operating cash flows and available credit facilities, and continues its commitment to shareholder returns through dividends and share repurchases. The company remains focused on its long-term strategy of developing sustainable packaging solutions.

Financial Highlights

52 data points
Beta

Revenue

$3.25B

19.1% Gross Margin

Net Income

$134.00M

4.1% Net Margin

EPS (Diluted)

$0.46

Total Assets

$16.73B

Cash & Equivalents

$430.00M

Free Cash Flow

$363.00M

Financial Statements
Beta
Revenue$3.25B
Cost of Revenue$2.63B
Gross Profit$621.00M
R&D Expenses$28.00M
SG&A Expenses$299.00M
Operating Income$242.00M
Interest Expense$89.00M
Net Income$134.00M
EPS (Basic)$0.47
EPS (Diluted)$0.46
Shares Outstanding (Diluted)288.00M

Key Highlights

  • 1Net sales for the three months ended December 31, 2023, decreased by 11% to $3.251 billion, and for the six months ended December 31, 2023, decreased by 9% to $6.694 billion, primarily due to lower volumes.
  • 2Net income attributable to Amcor plc significantly decreased by 71% to $134 million for the three months and 59% to $286 million for the six months, largely impacted by the non-recurrence of a $215 million pre-tax gain on the sale of the Russian business in the prior year.
  • 3Gross profit margin improved to 19.1% for the three months and 18.9% for the six months, up from 18.2% and 18.1% respectively, driven by an improvement in operating cost performance and favorable price/mix.
  • 4Restructuring and other related activities resulted in a net expense of $24 million for the three months and $52 million for the six months, compared to a net gain of $213 million and $212 million in the prior year, respectively, primarily related to the 2023 Restructuring Plan.
  • 5Interest expense increased by 13% for the three months and 26% for the six months, driven by higher variable interest rates.
  • 6The company maintained a strong liquidity position, with net cash provided by operating activities increasing to $228 million for the six months ended December 31, 2023, and has $1.0 billion in undrawn credit facilities available.
  • 7Amcor plc continued its capital return program with declared dividends and $30 million in share repurchases during the six-month period.

Frequently Asked Questions

The primary driver for the decrease in net sales was lower volumes across both the Flexibles and Rigid Packaging segments. This was attributed to softer customer demand, increased destocking, and challenging macroeconomic conditions.

The significant decrease in net income was primarily due to the non-recurrence of a substantial pre-tax gain of $215 million from the sale of the Russian business in the prior year's comparable periods. Additionally, higher restructuring expenses and increased interest expense, driven by rising interest rates, also contributed to the decline.

Amcor is focusing on several strategies, including implementing pricing and cost actions to offset inflation, aligning its cost base with market dynamics, managing working capital effectively, and executing structural cost reduction and productivity initiatives. The company is also progressing with its 2023 Restructuring Plan to improve efficiency and offset divested earnings.

Amcor plc maintains a strong liquidity position, with an increase in net cash provided by operating activities and substantial available credit facilities ($1.0 billion undrawn as of December 31, 2023). The company believes its financial resources are sufficient to fund operations, capital expenditures, and shareholder returns, including dividends and share repurchases, for the foreseeable future.