AMC Amcor PLC

   By David Winning 
 

SYDNEY--Packaging company Amcor Ltd. (AMC.AU) reported improved underlying earnings in its fiscal first half and stuck with full-year guidance as it advanced a planned takeover of U.S.-based Bemis Co. (BMS).

Amcor said its net profit totaled US$267.6 million in the six months through December, down from US$329.7 million a year ago. After stripping out the impact of currency swings, underlying earnings improved by 3.4% to US$328.5 million, reflecting an improvement in volumes in Amcor's North American beverages business and earlier mergers-and-acquisitions activity boosting its flexibles packaging business.

Directors declared an interim dividend of 21.5 U.S. cents a share, up 2.4% from 21 cents a year ago.

Late last month, Amcor said its acquisition of plastic food packaging company Bemis won't now close until the second quarter of 2019 due to the recent shutdown of the U.S. government. Amcor and Bemis need U.S. antitrust approval, but the partial shutdown had delayed the review of shareholder meeting documentation by the Securities and Exchange Commission.

Amcor in August agreed to buy Bemis in a stock deal worth about US$5.26 billion. Some analysts have questioned whether Bemis shareholders will vote in favor of the deal, given the takeover premium has narrowed since August due to the depreciation of the Australian currency against the dollar and weakness in Amcor's share price.

The delay in completing the deal has led investors to focus more on trends within Amcor's existing business, including the outlook for raw-material costs. Management has made savings on plant construction and procurement, while also slowing capital spending, to counter cost headwinds.

Amcor said raw-material prices shaved about US$5 million off earnings in its flexible-packaging business in its fiscal first half, since it takes some months before it can raise product prices with customers.

Still, its flexibles business delivered a US$389.8 million profit before interest and tax in the period, up slightly on a year earlier after stripping out the impact of currency swings. That improvement reflected earnings from acquired businesses and the benefits of an earlier restructuring effort.

Management said growth in demand for plastic bottles from North American drinks makers had continued, and this benefited its rigid-plastics business. It reported a US$148.9 million profit before interest and tax in this division for the half year.

"We remain on track to deliver against the full-year outlook we provided in August 2018, which has not changed," Chief Executive Ron Delia said. "In the 2019 financial year we expect both the Flexibles and Rigids segments to achieve solid underlying earnings growth in constant currency terms, and cash flow is expected to be strong."

Management said it expects free cash flow between US$200 million and US$300 million for the year.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

February 10, 2019 16:52 ET (21:52 GMT)

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