Packaging giant Amcor Limited (ASX: AMC) this morning posted a net profit of US$321.3 million on sales revenue of US$4.8 billion for the six-month period ending December 31, 2014. The profit and revenue were up 6.7% and 0.3% respectively over the prior corresponding period (pcp).
The company also announced a US$500 million on-market share buyback, alongside 6.8% earnings per share growth and an interim dividend up an impressive 25% on the pcp when FX-adjusted. Aussie investors should continue to benefit from an exchange rate tailwind that may even strengthen in the year ahead. The group retains a sound balance sheet thanks to the company's big cash generation.
Global exposure
Amcor's defensive earnings and overseas exposure underpinned by organic and acquisitive growth are what should make it attractive to investors.
Over the past four years the company has completed 16 acquisitions and made some organic growth investments to deliver margin expansion through cost-cutting, operational improvements, and technological innovation.
The North American business has benefited from a strengthening local economy and upturn in consumer demand, while emerging markets in Asia with huge populations are another growth area. Manufacturing and raw material costs are other variables which rise and fall with energy or aluminium prices for example.
Outlook
The stock has climbed 25% over the last year having benefited from its demerger with Orora Ltd (ASX: ORA), and continues to look one of the best long-term investments on the ASX in my opinion.
The business has forecast more steady growth in the year ahead and the price should receive support as a result of the US$500 million buyback, which represents around 3.2% of the company's total market value.
Overall, with another year of higher profits expected, a reasonable valuation and attractive yield around 3.4%, it looks a sound long-term prospect.
