01—Abstract
Summary
Summary of the 8-K filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Amcor plc's first quarter of fiscal 2025 (three months ended September 30, 2024) showed modest but improving operating trends.
Net sales were $3,353 milliona, down 3% reported and about 2% on a comparable constant currency basis, while volumes grew about 2%, the third consecutive quarter of sequential improvement. Adjusted EBIT rose 3% on a comparable constant currency basis to $365 million, with adjusted EBIT margin expanding 50 basis points to 10.9%. Adjusted EPS was 16.2 cents, up 5% on a comparable constant currency basis.
GAAP net income attributable to Amcor was $191 millionb, or 13.2 cents diluted EPS, versus $152 million a year earlier. The weaker spot is cash flow and leverage. Adjusted free cash outflow widened to $395 million from $227 million, driven by higher inventories to support volume recovery and increased capital expenditure.
Net debt rose to $6,872 millionc, and leverage reached 3.5 times, with management guiding to 3.0x or below by June 30, 2025. Management reaffirmed fiscal 2025 guidance of adjusted EPS of 72 to 76 cents and adjusted free cash flow of $900 million to $1,000 million, and raised the quarterly dividend to 12.75 cents per share. The company also agreed to divest its 50% stake in the Bericap joint venture for $122 million, expected to close in 2Q25.
For investors, the key tension is between improving volume and margin execution and a heavy working capital drag that must reverse in the back half of the year for the free cash flow and deleveraging targets to be met. Healthcare destocking and soft North American beverage demand remain headwinds, and the company's guidance implies a significant second-half cash flow recovery.
02—Key points
Key Highlights
- Net sales of $3,353 million, down 3% reported (about 2% lower on a comparable constant currency basis), with volumes up about 2%, the third straight quarter of sequential volume improvement.
- Adjusted EBIT of $365 million, up 3% on a comparable constant currency basis, with adjusted EBIT margin expanding 50 basis points to 10.9%.
- Adjusted EPS of 16.2 cents, up 5% on a comparable constant currency basis; GAAP diluted EPS of 13.2 cents versus 10.5 cents a year earlier.
- Adjusted free cash outflow widened to $395 million from $227 million, reflecting higher inventories and increased capital expenditure.
- Net debt of $6,872 million and leverage of 3.5x; management expects leverage at or below 3.0x by June 30, 2025.
- Fiscal 2025 guidance reaffirmed: adjusted EPS of 72 to 76 cents and adjusted free cash flow of $900 million to $1,000 million.
- Quarterly dividend increased to 12.75 cents per share from 12.5 cents; agreed to divest the 50% Bericap joint venture interest for $122 million.
03—Questions
Frequently Asked Questions
Did Amcor meet expectations in its first quarter of fiscal 2025?
Management described the quarter as in line with its expectations set in August. Adjusted EPS grew 5% on a comparable constant currency basis and EBIT grew 3%, with volumes improving sequentially. Reported net sales declined 3%, however, and adjusted free cash flow was notably weaker than the prior year.
Why did free cash flow decline so sharply this quarter?
Adjusted free cash outflow was $395 million versus $227 million a year earlier. The company attributed this mainly to higher inventories to support improving volumes and an expected increase in capital expenditure. Management expects working capital to normalize as the year progresses, supporting its $900 million to $1,000 million full-year free cash flow guidance.
Is Amcor on track to reduce its leverage?
Leverage rose to 3.5 times net debt to adjusted trailing EBITDA at September 30, 2024, partly due to unfavorable spot exchange rates, which added about 0.1 times. Management expects leverage to improve through the year and to be at or below 3.0 times by June 30, 2025, which depends on delivering the planned second-half cash generation.
What are the main headwinds in the business?
Healthcare categories saw destocking and lower volumes, and North American beverage demand remained soft, with beverage volumes down at high single digit rates in Rigid Packaging. Price/mix was unfavorable by about 3%, primarily due to weaker high-value healthcare volumes. Management said these trends were expected.
What does the Bericap divestiture mean for investors?
Amcor agreed to sell its 50% interest in the Bericap joint venture for $122 million, with closing expected in the second quarter of fiscal 2025. The proceeds are modest relative to the company's roughly $6.9 billion of net debt, so the transaction is more a portfolio refinement than a significant deleveraging event.
04—Continue