The Amcor CDI (ASX: AMC) share price is up this morning after the global packaging company posted a solid earnings report for the first quarter of FY21.
In particular highlights, the company’s adjusted earnings per share (EPS) is up 20% in constant currency terms. Moreover, the company expects to deliver EPS growth to 7-12% in constant currency terms, up from 5-10%.
The Amcor share price has lifted 3.98% to a price of $16.06 at the time of writing. Let’s take a closer look.
What’s moving the Amcor share price?
Performance
During the first quarter, the Bemis acquisition delivered synergies of $20 million. Thus far, it has delivered $100 million on a transaction-to-date basis. The company expects total cost synergies of $180 million (pre-tax) by the end of fiscal 2022.
Net sales for the Amcor Group of $3,097 million were 2% higher than last year. In addition, overall volumes sold were 2% higher than the prior corresponding period (pcp).
In the flexible packaging segment, volumes were 2% higher than pcp, with volume growth in North America, Asia Pacific and Latin America offset by lower volumes in Europe.
Specifically, in North America, volumes grew in the mid-single digit range, mainly driven by strength in the meat, cheese, condiments, pet food and home and personal care end markets as well as specialty folding cartons. However, volumes were higher across the Asian emerging markets. Specifically, mid-single digit and double digit growth in China and India respectively.
For rigid packaging, overall segment volumes were 4% higher than the prior year, with volume growth in North America offset by lower volumes in Latin America.
In North America, beverage volumes were 7% higher than the prior period with hot fill container volumes up 12%. Nonetheless, In Latin America, volumes were 3% lower compared with the prior period.
Dividend
The Amcor board have determined ASX shareholders will receive an unfranked dividend of 16.55 cents per share. The ex-dividend date is 23 November, 2020, the record date is 24 November, 2020 and the payment will be on 15 December, 2020.
Share buy back
The Amcor board of directors has approved a $150 million buy-back of ordinary shares and CDIs. This will be funded by divestment proceeds received during the current period.
Management comments
Amcor CEO Ron Delia said Amcor’s 2021 fiscal year was “off to a strong start with outstanding first quarter financial results ahead of our expectations”.
Demand for our products remains resilient and our teams continue to stay focused and to deliver excellent operational performance. Both segments delivered strong growth with Adjusted EBIT increasing 11% in Flexibles and 7% in Rigid Packaging, in constant currency terms. The outperformance in the first quarter gives us the confidence to raise our outlook for fiscal 2021 adjusted EPS growth to 7-12%, increase the dividend and use divestment proceeds to buy back shares.
Mr Delia went on to say the Amcor investment case had never been stronger:
In addition to further acquisition synergies and an attractive dividend currently yielding more than 4%, organic growth from our consumer and healthcare exposure should remain resilient and will be enhanced over time from innovations delivering more sustainable packaging. With a strong balance sheet and annual free cash flow of over $1 billion, we also have substantial capacity to reinvest in the business and to pursue acquisitions.
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Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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