Hard times: Amcor ups its profits but cuts back its workforce. Photo: Bloomberg
PACKAGING company Amcor has blamed a strong dollar and challenging conditions in Australia that will see it shed more than 300 jobs at manufacturing sites in Victoria and Queensland.
The move came as Amcor increased its first-half profit by 16.3 per cent to $238.3 million for the six months to December. The impact of a high Australian dollar sliced some $20 million from the bottom-line result.
"We've have a solid first half," Amcor's managing director and chief executive Ken MacKenzie told an investor briefing on Monday.
"[Earnings per share] increased 7.2 per cent and on a constant currency basis that's 14.1 per cent. This improved profit is a result of operating improvements, organic growth in emerging markets, improvement in our product mix through innovation and … the contribution from acquisition."
Amcor declared an interim dividend of 19.5¢ a share, up 8.3 per cent last year. This helped Amcor shares close almost 2.5 per cent higher at $9.14 on Monday.
The firm reported an underlying profit of $322 million, a 5.7 per cent increase from the previous corresponding period, after a $83.7 million hit from the closure of its cartonboard mill in Petrie, Queensland. The Petrie closure will see 220 employees made redundant and 97 staff will lose their jobs as a result of the midyear closure of the Thomastown manufacturing site and changes at the North Laverton site, both in Victoria.
Mr MacKenzie said Amcor's new recycled paper machine in Botany, New South Wales, and recent acquisitions, such as the Shorewood tobacco packaging business, would drive earnings in the short term.
Analysts said Amcor's share price on Monday reflected investors' reaction to its acquisition of the Shorewood business, reported on Friday. Shorewood has plants and assets in the Americas and east Asia.
Amcor reported operating profit before interest and taxes of $344.6 million in its largest business, Flexibles, a 4.7 per cent increase despite subdued conditions in developed economies and reflecting the defensive nature of the food, beverage, healthcare and tobacco packaging markets.
Macquarie Bank analyst John Purtell said Amcor's headline growth was broadly in line with expectations.
"[It's] more of the same from Amcor in terms of solid results and delivery on expectations," Mr Purtell said, adding that there would be a focus on potential mergers and acquisitions.
"They have executed acquisitions such as Alcan [Packaging] very well, so the market is likely to support them," Mr Purtell said.
Amcor has undergone a revival since Mr MacKenzie took charge in 2005 and after its involvement in a price-fixing cartel with Visy, shedding underperforming assets while making select acquisitions such as Alcan Packaging and Ball Plastics during the global financial crisis.