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Why the Amcor Limited share price took a hit today

Amcor Limited (ASX:AMC) announced today that due to rising raw material prices there will be a negative hit to earnings of $US15 million in 2H18, the most significant impact since FY11.

The company has previously issued a downgrade to FY18 earnings. In response, the company has increased prices to recover the higher input costs, but there is a time lag before the higher prices will have an impact.

Also, Amcor said that the Rigid Plastics division is seeing lower volumes, which will have a more significant effect on 2H18 earnings than on 1H18 earnings.  

Amcor is down 2.4% at the time of writing to $13.44. The company is paying an annual dividend yield of 4%, which is unfranked and is trading on a forward price to earnings ratio of 16x. The share price is down 12% in a year. 

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Motley Fool contributor Rosemary Steinfort owns shares of Amcor Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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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