Amcor Announces Profit Result For Full Year Ended June 30, 2008

Amcor today announced their Full Year Results for the year ended June 30, 2008.

21 August, 2008:  Highlights

• Profit before interest and tax up 9.4% for continuing businesses, on constant currency terms;
• Profit after tax and before significant items $369.1 million;
• Earnings per share, before significant items 42.9 cents;
• Translation impact from the higher Australian dollar on profit after tax was a negative $32 million, which represented 3.7 cents per share;
• Final dividend of 17 cents per share, giving a full year dividend of 34 cents per share; and
• Free cash flow, after the payment of the dividend of $112.4 million.
• Significant items, primarily relating to planned restructuring, was a loss of $110.3 million, compared to a profit of $136.7 million in the 2006/07 year.

In announcing the result, Amcor’s Managing Director and CEO, Ken MacKenzie said: “The profit before interest and tax for the continuing businesses, expressed on a constant currency basis, was up 9.4%. This increase continues the positive momentum established over the past 18 months and is a result of the successful implementation of The Way Forward agenda.

“The profit after tax of $369 million was a solid result given the negative impact on earnings of the strong Australian dollar. Approximately 80% of Amcor’s earnings are generated offshore,mostly in North America and Europe and the translation of these earnings into Australian dollars, for reporting purposes, had a $32 million negative impact on profit after tax.

“Free cash flow for the year was $112 million. This is the third consecutive year of strong performance and over that period the cumulative free cash flow has been $650 million.

“A key driver for the strong free cash flow has been a reduction in the working capital, of the continuing businesses, of $425 million over the past three years.

“PET Packaging had an outstanding year, with earnings for the continuing businesses up 29%, in local currency terms. Volume growth in the higher technology, hot-fill custom containers was 24% and this category now represents 45% of the total sales value.

“The strategy for PET Packaging of focusing on the higher growth, custom containers segment, where it has a strong market position, supported by industry leading technology, has been correct with returns for the business increasing from 9.2% to 12.0% over the past two years.

The outlook for PET Packaging is for continued earnings improvement in the 2008/09 year.

“The Food Flexibles and Healthcare Flexibles businesses had good performances with both achieving increased earnings. This was driven by a focus on improving the product mix to higher value add products and the benefit of the European turnaround program. Both businesses successfully passed on rising input costs and in July this year, announced additional price increases to recover further cost increases.

“The tobacco packaging operations completed a substantial investment program in Eastern Europe during the year. This included the start up of the plant in the Ukraine and installing new presses in Russia and Poland.

“The outlook for the combined Flexibles business is for significantly improved earnings in the current year, with the key drivers being the benefits from the restructuring program in Western Europe and the growth initiatives in Eastern Europe.

“In Australia and New Zealand, the glass wine bottle operations delivered another strong result. In June 2008, a $150 million investment in a third furnace that will increase capacity at the plant to 600 million wine bottles per year was announced. This new investment is supported by long term customer supply arrangements.

Outlook

“Across all the business units there are extensive programs in place to help ensure the momentum of the past 18 months continues into the current year.

“There is evidence however, that global economies are slowing and this could impact the growth in sales. Amcor’s businesses are relatively defensive with over 90% of sales into the consumer stables sector, specifically food, beverage, tobacco packaging and healthcare.

“Inflationary pressures are increasing, with the impact of higher oil prices flowing through to input costs and higher cost inflation in most countries.

“Over the past three years there have been comprehensive programs implemented to ensure rising costs are recovered through higher selling prices. The growth in earnings for the continuing business over the past 18 months is a clear demonstration of the success of these efforts and we expect this trend to continue” said Mr MacKenzie.

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