Paper and packaging group, Amcor Limited (ASX: AMC) has reported a net profit of $238 million for the six months to December 2012, up 16.3% over the previous year.
That’s despite the high Australian dollar eating about $20 million of profits after tax, according to the company’s chief executive Ken McKenzie. Amcor earns a significant amount of revenue offshore, and like Cochlear Limited (ASX: COH), CSL Limited (ASX: CSL) and Ansell Limited (ASX: ANN), a high Australian dollar means earnings are negatively affected by the high Aussie dollar.
Earnings per share (before significant items) grew just over 7%.
On an underlying basis, net profit came in at $322 million, a 5.7% increase over the previous year, before accounting for a $84 million charge from the closure of its Queensland cartonboard plant.
Mr McKenzie noted, “Volumes across a number of key market segments in developed countries continued to be stable and there was strong volume growth in emerging markets.”
The company’s largest division, Flexibles, posted a 4.7% increase in earnings before interest and tax (EBIT) to $344.6 million, while its Rigid Plastics division recorded an 8.8% rise in EBIT, to $123 million. Amcor’s Australasia and Packaging Distribution let the company down, with EBIT falling 7.8%.
Full year earnings for the 2013 financial year are expected to be in line with the previous year.
The company declared an interim un-franked dividend of 19.5 cents, placing the company on a dividend yield of around 4%, around what you can get in a bank account. Earnings per share in 2012 are less than the company earned in 1999/2000, mainly thanks to an almost doubling in the number of shares on issue, and despite revenues doubling.
Trading on a prospective P/E ratio of around 23, Amcor appears overpriced relative to its potential growth. Combined with a net debt to equity ratio of more than 110%, Foolish investors could be forgiven for giving this company a wide berth.
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