Amcor plc Q1 FY2026 earnings call

Key Managerial Messages

• Amcor completed 180 days as a combined company with teams integrating well, and customers receptive to expanded offerings. Adjusted EPS of $0.193 per share was above guidance midpoint, up 18% year-over-year.
• Synergy realization was strong with $38 million in synergies delivered in Q1, towards the high end of guidance range. Headcount reductions exceeded 450, and procurement savings and opportunity pipeline continued to build.
• Safety metrics were strong in Q1 with Amcor's total recordable incident rate at 0.55 and 89% of sites injury-free.
• Addressed noncore assets, entering into agreements to sell 2 businesses for approximately $100 million. The Board approved increasing the quarterly dividend to $0.13 per share.
• Focused on core portfolio of Nutrition, Health Care, and Beauty and Wellness, exploring strategic alternatives for noncore businesses. Already secured over $70 million in annualized sales revenue from growth synergy initiatives

Global Flexible Packaging Solutions

• Net sales increased 25% on a constant currency basis, with comparable net sales down 2%. Adjusted EBIT rose 28% on a constant currency basis to $426 million, and EBIT margin was 13.1%, up 20 basis points year-over-year. Regionally, developed markets in North America and Europe had low single-digit volume declines, while emerging markets in Asia saw growth offset by Latin America's lower demand. End markets: pet care and dairy had good growth, health care was in line, but fresh meat and liquids were softer.

Global Rigid Packaging Solutions

• Net sales increased 205% on a constant currency basis mainly due to the Berry acquisition, but comparable net sales were lower with a 1% volume decline excluding noncore North America Beverage. Adjusted EBIT of $295 million increased 365% on a constant currency basis, with EBIT margin of 11.9%, 420 basis points higher than last year. Regionally, North America's demand was in line, Europe's volumes were marginally down, and Latin America's were low single-digit down. End markets: pet care performed strongly, health care grew in Europe, offsetting softer demand in Foodservice and premium Beauty and Wellness

Financial Guidance

• Reaffirmed adjusted EPS guidance of $0.80 to $0.83 per share, representing 12% - 17% year-over-year growth.
• Free cash flow guidance of $1.8 billion to $1.9 billion in FY '26, which is double fiscal 2025 cash flow.
• Confident in delivering at least $260 million in synergies in fiscal '26 and $650 million total through fiscal '28. The guidance for EPS growth is largely supported by synergy realization, not dependent on macroeconomic or demand improvements

Risks

• Uncertainty in the macroeconomic environment and end customer/consumer demand could impact earnings performance.
• Progress on divestment of noncore assets, including the North American beverage business, is uncertain in terms of timing and outcome. The success of portfolio optimization efforts relies on successful execution of divestment and strategic alternatives

Q: Ghansham Panjabi with Baird asked about the recent decline in Flexibles volume, specifically what's driving it.

A: Peter Konieczny responded that the Flexibles weakness was in Europe, driven by general market softness in the unconverted film subcategory which is a non-processed film sold into various end markets Q: Ramoun Lazar with Jefferies inquired about the North American beverage business update.

A: Peter Konieczny said operational issues in the North American beverage business were quickly turned around, and they're actively exploring strategic alternatives for the noncore business, including joint ventures and partnerships Q: Anthony Pettinari with Citi asked about the volume performance of focus categories.

A: Peter Konieczny stated that focus categories performed better than the overall business. Pet care was strong, dairy had mixed growth, while meat and liquids were weaker due to consumer value-conscious behavior Q: John Purtell with Macquarie asked about cost and productivity management.

A: Michael Casamento said the team flexed the cost base in response to softer demand, managing shift patterns and line performance, with synergies delivered towards the upper end of the guidance range Q: George Staphos with Bank of America asked about synergy marriage in Lat Am and the Foodservice award.

A: Peter Konieczny talked about synergy momentum, a Beauty and Wellness customer win in Latin America by combining Amcor Rigid container with Berry closure, and a Foodservice award from combined business capabilities Q: Brook Campbell-Crawford with Barrenjoey asked if the EPS range covers volume decline scenarios.

A: Peter Konieczny said they'll manage costs and focus on synergy delivery, with the guidance range encompassing various volume outcomes as they'll adjust to actual volume situations Q: Matthew Roberts with Raymond James asked about divestitures sales, EBITDA contribution, and remaining noncore assets.

A: Michael Casamento said the divestitures had small impact, used cash to pay down debt, and they continue working on other noncore businesses Q: Cameron McDonald with E&P asked if volume performance was due to organic reductions or market share loss.

A: Peter Konieczny stated it's not a share loss story, with some shift in beverage substrates in multipack sales due to consumer value-seeking Q: Nathan Reilly with UBS asked about private label exposure and volume trends.

A: Peter Konieczny said they have exposure to private label and see opportunity to drive growth there as they're somewhat underrepresented in the market Q: Gabe Hajde with Wells Fargo asked about the health care trajectory.

A: Peter Konieczny said health care is expected to improve into 2026 and the back half of fiscal '26, with stronger performance in North America and continued improvement over time