CoffeeNetwork (New York) – Amcor has released it’s financial 2023 results.
Fiscal 2023 Full Year Highlights
- Net sales of $14,694 million, in line with the prior year on a comparable constant currency basis;
- GAAP Net Income of $1,048 million; GAAP diluted earnings per share (EPS) of 70.5 cps;
- Adjusted EPS of 73.3 cps and Adjusted Free Cash Flow of $848 million, in line with guidance provided in May. Adjusted EBIT of $1,608 million;
- Strong total cash returns to shareholders of $1.2 billion: annual dividend increased to 49.0 cents per share; $431 million of shares repurchased (approximately 3% of outstanding shares); and
- Fiscal 2024 outlook: Adjusted EPS of 67-71 cents per share. Adjusted Free Cash Flow of $850-950 million.
Twelve months ended June 30, 2023
Net sales for the Amcor Group increased by 1% on a reported basis, which includes an unfavorable impact of approximately 3% related to movements in foreign exchange rates, an unfavorable impact of approximately 1% related to items affecting comparability, and price increases of approximately $775 million (representing 5% growth) related to the pass through of higher raw material costs.
Net sales on a comparable constant currency basis were in line with the prior year, largely reflecting price/mix benefits of approximately 3%. Full year volumes were approximately 3% lower than last year.
GAAP Net Income was $1,048 million and includes a $215 million gain on the sale of Amcor's business in Russia on December 23, 2022. Adjusted EBIT of $1,608 million was 1% higher than last year on a comparable constant currency basis. Adjusted EBIT margin of 10.9% includes an adverse impact of approximately 90 basis points related to increased sales dollars associated with passing through higher raw material costs and general inflation.
June 2023 quarter
Net sales for the Amcor Group of $3,673 million were 6% lower than last year on a reported basis. This includes an unfavorable impact of approximately 2% related to items affecting comparability and price increases of approximately $25 million (representing 1% growth) related to the pass through of higher raw material costs. Movements in foreign exchange rates had no material impact on net sales for the quarter.
Net sales on a comparable constant currency basis were approximately 5% lower than the same period last year. Volumes were approximately 7% lower than last year. This was partly offset by price/mix benefits of approximately 2%.
GAAP Net Income was $181 million. Adjusted EBIT of $436 million was approximately 7% lower than last year on a comparable constant currency basis.
Twelve months ended June 30, 2023
Net sales of $11,154 million were in line with last year on a reported basis, including an unfavorable impact of approximately 4% related to movements in foreign exchange rates, an unfavorable impact of approximately 2% related to items affecting comparability, and price increases of approximately $515 million (representing 5% growth) related to the pass through of higher raw material costs. On a comparable constant currency basis, net sales were approximately 1% higher than last year reflecting price/mix benefits of 4%, partly offset by approximately 3% lower volumes.
In North America, net sales were marginally lower than the prior year driven by lower volumes, partly offset by price/mix benefits. Volumes were higher in the healthcare, pet care, cheese, and home and personal care categories, and this was more than offset by lower volumes in categories including condiments, meat, and ready meals.
In Europe, net sales grew in the low single digit range driven by price/mix benefits, partly offset by lower volumes. Volumes were lower in the coffee, home and personal care, yogurt and confectionary categories. This was partly offset by higher volumes in the pet care and pharmaceutical categories.
Net sales were in line with the prior year across the Asia Pacific region, with price/mix benefits offset by lower volumes. Volumes were lower in China where demand was unfavorably impacted by COVID-19 related lockdowns. Sales growth remained strong in India, Australia, and the pan-Asian healthcare and meat end markets. In Latin America, net sales declined in the low single digit range driven by lower volumes, partly offset by price/mix benefits.
Adjusted EBIT of $1,429 million was 1% higher than in the prior period on a comparable constant currency basis, reflecting favorable operating cost performance, partly offset by the impact of lower volumes and unfavorable mix trends.
Adjusted EBIT margin of 12.8% includes an adverse impact of approximately 100 basis points related to the increased sales dollars associated with passing through higher raw material costs and general inflation.
June 2023 quarter
Net sales of $2,777 million were 6% lower than last year on a reported basis, including a favorable impact of approximately 1% related to movements in foreign exchange rates, an unfavorable impact of approximately 3% related to items affecting comparability, and price increases of approximately $25 million (representing 1% growth) related to the pass through of higher raw material costs. On a comparable constant currency basis, net sales were approximately 5% lower than last year reflecting approximately 7% lower volumes, partly offset by price/mix benefits of 2%.
Volume weakness was broad based with high single digit declines across the European and North American markets, and a mid single digit decline in Latin America. The volume decline in these regions reflects soft consumer demand as well as customer destocking. In Asia, overall volumes were in line with the same quarter last year.
Adjusted EBIT of $387 million was lower than the same quarter last year on a comparable constant currency basis, reflecting lower volumes and heightened volatility in customer order patterns, unfavorable mix trends, and ongoing cost inflation. These unfavorable impacts were partly offset by benefits from price and cost reduction initiatives.
Twelve months ended June 30, 2023
Net sales of $3,540 million were 4% higher than last year on a reported basis, including an unfavorable impact of approximately 1% related to movements in foreign exchange rates and price increases of approximately $260 million (representing 8% growth) related to the pass through of higher raw material costs. On a comparable constant currency basis, net sales were approximately 3% lower than last year, reflecting price/mix benefits of approximately 1% offset by approximately 4% lower volumes.
In North America, overall beverage volumes were 6% lower than last year. Hot fill beverage container volumes were in line with the prior year as new business wins in key categories offset unfavorable consumer demand and customer destocking. Combined preform and cold fill container volumes were lower than the prior year. Overall specialty container volumes were lower than the prior year with growth in the healthcare, dairy and nutrition categories offset by weaker volumes in the food and home and personal care categories.
In Latin America, volumes declined at low single digit rates which reflects challenging economic conditions across the region.
Adjusted EBIT of $265 million was lower than the prior year on a comparable constant currency basis, reflecting lower volumes and unfavorable mix trends, partly offset by favorable operating cost performance.
Adjusted EBIT margin of 7.5% includes an adverse impact of approximately 80 basis points related to the increased sales dollars associated with passing through higher raw material costs and general inflation.
June 2023 quarter
Net sales of $897 million were 5% lower than the same quarter last year on a reported basis including an unfavorable impact of 1% related to movements in foreign exchange rates. On a comparable constant currency basis, net sales were 4% lower than last year reflecting approximately 6% lower volumes, partly offset by price/mix benefits of approximately 2%.
In North America, overall beverage volumes were 8% lower than the same quarter last year as a result of lower consumer demand and customer destocking more than offsetting new business wins. June 2023 quarter hot fill beverage container volumes were 6% lower than last year, broadly in line with the market.
Adjusted EBIT of $73 million was lower than the same quarter last year on a comparable constant currency basis, reflecting lower volumes and heightened volatility in customer order patterns, unfavorable mix trends, and ongoing cost inflation. These unfavorable impacts were partly offset by benefits from price and cost reduction initiatives.
Net interest and income tax expense
For the year ended June 30, 2023, net interest expense of $259 million was $124 million higher than the same period last year, reflecting higher interest rates. GAAP income tax expense was $193 million compared with $300 million last year. Excluding amounts related to non-GAAP adjustments, adjusted tax expense for the year ended June 30, 2023 was $250 million compared with $332 million in the prior year. Adjusted tax expense represents an effective tax rate of 18.5% which is lower than 21.2% last year, primarily due to differences in the mix of taxable income and discrete items in both periods.
Adjusted Free Cash Flow
Adjusted Free Cash Flow for fiscal 2023 was $848 million and compares with $1,066 million last year. The year over year variance largely reflects higher interest payments and lower accounts payable balances resulting from moderated purchasing activities due to lower demand and inventory reduction initiatives. June 2023 quarter Adjusted Free Cash Flow of $834 million compares with $803 million in the same quarter last year.
Net debt was $6,057 million at June 30, 2023. Leverage, measured as net debt divided by adjusted trailing twelve month EBITDA, was 3.0 times and in line with the Company's expectations.
Fiscal 2024 Guidance
For the twelve-month period ending June 30, 2024, the Company expects:
Adjusted EPS of 67 to 71 cents per share which includes:
Comparable constant currency earnings which includes underlying business performance down low single digit % to up low single digit %, a benefit of approximately 2% from share repurchases, and a negative impact of approximately 6% related to higher estimated net interest and tax expense;
A negative impact of approximately 3% related to the sale of the Company's three plants in Russia on December 23, 2022; and
A benefit of approximately 2% related to currency translation, assuming current rates prevail through the balance of fiscal 2024.
The Company expects adjusted EPS on a reported basis in the first half of fiscal 2024 to be down in the mid-teens % compared with the first half of fiscal 2023, primarily due to lower volumes and the residual headwinds related to the sale of the Russia plants and higher interest expense. In the second half of fiscal 2024, adjusted EPS is expected to be up mid-single digits % compared with the second half of fiscal 2023, benefiting in-part from structural cost saving initiatives and increased earnings leverage resulting from price and cost actions taken in fiscal 2023 and 2024.
Adjusted Free Cash Flow of approximately $850 million to $950 million, representing solid growth over fiscal 2023.
Approximately $70 million of cash to be allocated towards share repurchases as part of the program previously announced in fiscal 2023.
Alexis Rubinstein
Amcor Reports Fiscal 2023 Results, Lower Coffee Volume
