The Amcor (ASX: AMC) share price is rising on Wednesday morning.
At the time of writing, the packaging giant's shares are up 1% to $14.50.
This follows the release of the company's half-year update.
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Amcor share price higher on half-year update
- Net sales down 9% to US$6,694 million
- Adjusted EBITDA down 8% to US$913 million
- Adjusted net income down 10% to US$453 million
- Adjusted earnings per share down 14% to 31.3 US cents
- Quarterly dividend increased to 12.5 US cents per share
- Guidance reaffirmed for adjusted earnings per share of 67-71 US cents
What happened during the half?
Amcor's net sales were 9% lower than the prior corresponding period due to weakness across both its Flexibles and Rigid Packaging segments.
Its Flexibles business posted a 10% decline in sales. This reflects higher volumes in the condiments, snacks and confectionary categories, which was more than offset by lower volumes in categories including healthcare, meat, and liquid beverage.
It was a similar story for its Rigid Packaging business, which posted a 7% decline in sales. It experienced a significant drop in beverage volumes, reflecting a combination of lower consumer and customer demand, as well as destocking.
The good news is that the company was able to keep its margins in both segments relatively steady despite the lower volumes. This meant that its earnings were down largely in line with its sales for the half.
This ultimately led to its earnings per share coming in slightly better than expected. This may explain why the Amcor share price is rising today.
Management commentary
Amcor's CEO, Ron Delia, was pleased with the half. He said:
Solid fiscal 2024 second quarter and first half execution led to adjusted free cash flow ahead of last year and adjusted earnings per share modestly above our expectations set out in October, despite challenging market conditions. This leaves us on track to achieve our full year earnings and cash flow guidance for the 2024 fiscal year, which we are reaffirming today.
Outlook
As mentioned above, Amcor has reaffirmed its full year guidance. It expects adjusted earnings per share of 67-71 US cents per share and adjusted free cash flow of US$850 million to US950 million.
Delia also revealed that the company is expected to return to earnings growth in the fourth quarter. He said:
We have seen volumes improve in January relative to the first half and we expect the business to build momentum in the second half, including delivering mid-single digit adjusted earnings growth in the fiscal fourth quarter. Confidence in our earnings outlook is based on known second half benefits related to the elimination of earnings headwinds from the sale of our Russia business, a lower interest expense headwind, and our structural cost reduction and productivity initiatives.
The Amcor share price is down 16% over the last 12 months.
