Amcor Plc (ASX: AMC) released its third-quarter results this week, and while the headline numbers were impressive, there's more to the figures than meets the eye.
This is because the company finalised the massive acquisition of Berry in late April last year, and hence any figures this year are naturally expected to be well up on the same period last year. That means it's helpful to look to the experts, in this case Macquarie, to get a handle on how the company is really travelling.
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Massive revenue jump
So what did Amcor announce this week?
Amcor said earlier this week that sales for the third quarter came in at US$5.91 billion, up 77%, and adjusted EBITDA was US$492 million, up 87%.
Amcor Chief Executive Peter Konieczny said regarding the result:
Third quarter results were in line with expectations and reflect the resilience of our business as we mark the first anniversary of bringing legacy Amcor and Berry together as One Amcor. Over the past year, we have executed a smooth integration, built a strong leadership structure, and made meaningful progress on synergy delivery and portfolio optimization. While we continue to operate in a challenging market environment, our global scale, diversified portfolio, and strong customer and supplier partnerships position us well.
Mr Konieczny said the company was pricing responsibly to offset inflation and it had "clear visibility to additional synergy benefits".
Amcor, he said, had a proven ability to navigate volatility and "we are confident in our outlook and the continued strength of our business".
While the company's financial results were strong, Amcor estimated that volumes were about 1.5% lower than for the combined Amcor and Berry businesses in the March quarter last year.
The company did boost its dividend, from US63.75 cents to US65 cents, with Australian shareholders to be paid 91 cents.
Shares looking like a good buy
Macquarie said in its note to clients this week that Amcor was managing raw materials costs well, "with no material impact expected on Q4 earnings''.
They added:
Having been hit hard by rising oil prices, stock is a beneficiary of any end to the Middle East war as supply chains & oil prices normalise in that event.
Macquarie said their investment thesis was based on the company delivering on further synergy savings, managing their controllables well, and a bounce back as the Middle East situation normalised.
Macquarie has a price target of $72 on Amcor shares compared with $55.02 currently.
Amcor also pays a dividend yield of 6.6%, with Macquarie expecting that to increase marginally in the coming years.
Amcor is valued at $24.37 billion.
