Amcor plc (AMCR) 2024 Q4 Earnings Call Summary

Optimistic Highlights

• Strong Financial Performance: Amcor reported strong financial results for the fourth quarter, driven by solid performance in the underlying business and a return to volume growth, resulting in adjusted EBIT growth on a comparable basis.

• Volume and EPS Growth: Overall volumes increased by 1% in the quarter compared to last year, exceeding expectations. Earnings per share also outperformed expectations, up 9%.

• Momentum into Fiscal '25: Amcor expects to build further momentum and deliver annual EPS growth through continued strong performance from the underlying business.

• Investment in Growth: The company continues to invest in organic growth across the business, including in higher-value priority categories and emerging markets.

• Strong Cash Flow: Adjusted free cash flow for fiscal '24 was $952 million, up more than $100 million from last year and just above the top-end of the guidance range.

Pessimistic Highlights

• Consumer Demand Remains Muted: Consumer demand continues to be low, with expectations not banking much on improvement for fiscal '25.

• Healthcare Destocking: Healthcare categories experienced continued destocking, impacting overall volumes negatively.

• Beverage Volumes in North America: Beverage volumes in North America were down, reflecting lower consumer demand in key end markets and unfavorable customer mix.

Company Outlook

• Fiscal '25 Guidance: Amcor expects adjusted earnings to be in the range of $0.72 to $0.76 per share on a reported basis, representing comparable constant currency growth of 3% to 8%. This includes an EPS headwind of approximately 4% related to more normalized levels of incentive compensation.

• Volume Growth Expectations: The company anticipates a volume increase in the low-to-mid single-digit range for the year, with trading performance in July aligned with this expectation.

• Continued Focus on Cost Control: Amcor will maintain a sharp focus on cost control and productivity initiatives to drive solid earnings growth.

Q & A Highlights

• Q: Can you give us a sense of what you're seeing in terms of true market conditions? (Ghansham Panjabi, Baird)

  A: Consumer demand continues to be muted, with volumes down 5% in fiscal year '24. The guidance for low-to-mid single-digit volumes reflects a cautious outlook on consumer demand improvement. (Peter Konieczny)

• Q: What are the assumptions for the healthcare business for volumes in fiscal '25? (Adam Samuelson, Goldman Sachs)

  A: Healthcare is expected to return to growth rates in line with historical averages of mid-single-digits growth after the destocking ends by the end of the calendar year. (Peter Konieczny)

• Q: Can you comment on the outlook for beverage in North America? (George Staphos, Bank of America)

  A: The outlook for beverage volumes in North America remains cautious, with no overly ambitious expectations for a turnaround in the near future due to the discretionary nature of the category. (Peter Konieczny)

• Q: What's the quantum of the $400 million of cost-out that will have to come back into the business as volumes pick up? (James Wilson, Jarden Australia)

  A: The structural benefits of $35 million will see a further $15 million in '25, completing the program. As volumes increase, labor will need to flex up, but the business is more efficient today. (Michael Casamento)

• Q: Regarding the flow of volumes through the quarter, where did the exit rate end at? (John Purtell, Macquarie)

  A: The 1% overall growth in the fourth quarter is indicative of the momentum into fiscal '25, with developed markets returning to growth despite healthcare destocking. (Peter Konieczny)