News

By Kate Tilley, Plastics News

Posted 10 March 2009 10:20 am GMT

Melbourne-based international packaging group Amcor says the impact of the global economic slowdown partly explains a 30% profit fall for the last six months of 2008. But despite the slide, the company is still interested in potential acquisitions around the globe.

An Amcor spokesman failed to scotch rumours about whether it would consider a bid for Constar International, a US-based rival that has filed to reorganise under Chapter 11.

Amcor’s sales grew 3.8% over the half-year to reach $3.1bn, compared with $3.01bn in the corresponding period in 2007. But net profit fell to $69.8m, down from $99m million during the same period.

In addition to the market slowdown, Amcor’s results were affected by write-downs totalling $37.9m linked to the group’s restructuring efforts, including disposal of some of its European PET operations as part of plans to shift to lower-cost production markets.

Managing director Ken MacKenzie described the half-year outcome as a “solid performance in particularly difficult economic circumstances”. He said PET packaging operations showed an “excellent operating performance” that partially offset the impact of lower sales volumes.

“During the [July-September 2008] quarter, there was significant destocking in the supply chain that adversely impacted volumes,” he said. “Since the end of October, volumes have more closely reflected underlying demand, particularly [for] higher value-add custom products.”

Robert Eastment, economist and director of the Australia packaging industry analyst Industry Edge, said once the costs of restructuring flow through Amcor’s books, it still has to face the ongoing impact of the worldwide economic crisis.

“There are some [products] that really do survive quite well. But in Amcor’s food and grocery markets there are many items that fall under discretionary spending and certainly will be impacted,” he said.

MacKenzie said earnings in the six months from January to June this year should benefit substantially from a combination of a weaker Australian dollar and lower costs for raw materials.

He said the company is still interested in acquisitions but remains “a patient and disciplined buyer” unafraid to walk away from deals where it considers asset prices are too high.