ASX 200 listed Amcor shares tumble despite increased earnings and dividends

Amcor returned some $400 million to shareholders through dividends and share repurchases in the first half of the 2023 financial year.

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Key points

  • The Amcor share price is down 3%
  • The ASX 200 packaging company released its second-quarter results this morning
  • Net sales increased 6% year on year to US$7.35 billion

Amcor PLC (ASX: AMC) shares are in the red in morning trade, down 3% at the time of writing.

The S&P/ASX 200 Index (ASX: XJO) plastic packaging giant closed yesterday trading for $17.27 per share and plunged as low as $16.45 apiece after open, shedding 4.75%.

Shares are currently changing hands for $16.75 apiece.

Here's what ASX 200 investors are mulling over today.

(Note, the dollar figures quoted below are all in US dollars.)

Amcor shares down despite earnings and sales growth

Amcor shares are mired in the red today, despite the company reporting some strong financial metrics for the first half of the 2023 financial year (1H FY23). Amcor released its quarterly figures for the three months ending 31 December this morning.

Among the highlights, the plastics packaging company reported net sales of $7.35 billion, an increase of 6% from 1H FY22.

Generally accepted accounting principles (GAAP) net income leapt 62% from the prior corresponding half year, reaching $691 million.

And GAAP diluted earnings per share (EPS) increased by 65% to 46.1 cents per share (cps). Adjusted EPS increased a more modest 8% on a comparable constant currency basis to 36.6 cps.

Adjusted earnings before interest and taxes was also up 8% from 1H FY22 on a comparable constant currency basis to $791 million.

The Amcor board declared an unfranked quarterly dividend of 12.25 US cents per share (17.3 Australian cps). That's up from 12 US cps in the same quarter last year.

In 1H FY23, Amcor returned some $400 million to shareholders through dividends and share repurchases. The company forecasts share repurchases of up to $500 million for the full 2023 financial year. That includes the additional $100 million it announced this morning.

What did management say?

Commenting on the results, Amcor CEO Ron Delia said:

Amcor delivered strong financial performance for the first half of fiscal 2023, demonstrating excellent operating leverage amid ongoing challenges in the macroeconomic environment…

Our teams are doing an excellent job navigating through volatile market conditions, while recovering general inflation and higher raw material costs. Our exposure to consumer staples and healthcare end markets positions our business well despite some softening in the demand environment and customer destocking through the December quarter.

We also completed the sale of our Russian plants and announced a bolt-on acquisition in China to strengthen our healthcare packaging business in the Asia Pacific region.

What's next for Amcor shares?

Amcor maintained its guidance for FY23. The company forecasts full-year EPS of 77 to 81 cents per share. It expects free cash flow in the range of $1 billion to $1.1 billion.

"Notwithstanding a more cautious near-term outlook, we remain focused on executing against our strategy for long term growth," Delia said.

"Our ability to generate significant annual cash flow allows us to continue to invest in multiple growth opportunities, pay an attractive and growing dividend and regularly repurchase shares."

How have Amcor shares been tracking?

As you can see in the graph below, Amcor shares are down 5.3% in 2023. The stock is up 3.8% over the past 12 months, not including the dividend payouts.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Amcor Plc. 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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