SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

AMCOR LIMITED

ABN 62 000 017 372

(Exact name of Registrant as specified in its charter)

NEW SOUTH WALES, AUSTRALIA

(Jurisdiction of incorporation of organisation)

679 VICTORIA STREET, ABBOTSFORD, VICTORIA 3067 AUSTRALIA

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Ordinary Shares

American Depositary Shares

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Ordinary Shares - 848,223,877

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý                                                             No o

Indicate by check mark which financial statement item the registrant elected to follow:

Item 17 o                                           Item 18 ý

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

Certain statements contained in this annual report constitute forward-looking statements. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe”, “continue”, or similar words. These forward-looking statements, including economic predictions and assumptions and business and financial projections and statements concerning Amcor’s business, involve known and unknown risks, uncertainties and other factors that may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, risks to Amcor’s businesses, including changes in the legal and regulatory regimes under which we operate, changes in the behaviour of our major customers and competitors and general changes in the economic conditions of the markets in which we operate.

Other factors are discussed under Item 3 - “Risk Factors” and elsewhere in this annual report. This list of important factors is not exhaustive. Given these risks, uncertainties and other factors, potential investors are cautioned not to place undue reliance on forward-looking statements.

These forward-looking statements speak only as of the date of this annual report, and Amcor does not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

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ITEM 3  KEY INFORMATION

“Company” or “Amcor Limited” means Amcor Limited ABN 62 000 017 372, the listed holding company of the Amcor Group. “Amcor” or “we” or “our” means Amcor Limited and all its subsidiary companies.

Our fiscal year ends on June 30.  The fiscal year ended June 30, 2003 is referred to herein as “2002-03” and other fiscal years are referred to in a corresponding manner.  All other references are to calendar years.

“A-GAAP” or “Australian GAAP” means Australian generally accepted accounting principles.

“US-GAAP” or “US GAAP” means United States generally accepted accounting principles.

“Significant items” means items of revenue and expense included in the operating profit or loss which are disclosed as significant under A-GAAP by reason of their size and effect on the operating profit or loss.  Significant items are not necessarily non-recurring items.  See Note 4 to the consolidated financial statements.

“Consolidated financial statements” means the audited consolidated balance sheets of Amcor as of June 30, 2003 and 2002 and the audited consolidated income statements and statements of cash flows for each of the one-year periods ended June 30 for the years 2003, 2002, and 2001 together with accompanying notes, included and incorporated by reference herein.

References here to “PBIT” refer to profit before interest and income tax excluding significant items.

References here to “PBITA” refer to profit before interest, income tax and amortization excluding significant items.

References to “PBITDA” refer to profit before interest, income tax, depreciation and amortization excluding significant items.

In this annual report, unless otherwise specified or the context otherwise requires, Australian dollar amounts are denoted by “A$” and United States dollar amounts are denoted by “US$”. For convenience, certain A$ amounts have been translated into US$ amounts at the exchange rate specified. These translations are indicative only and do not mean that the A$ amounts could be converted to US$ at the rate indicated.

On December 12, 2003, the noon buying rate was US$0.7396 = A$1.00.

For each of the periods indicated, the relevant noon buying rates in New York City for cable transfers payable in Australian dollars as certified for customs purposes by the Federal Reserve Bank of New York, were:

(1)                                                    The average of the noon buying rates on the last day of each month during the year.

The high and low exchange rates for the six months preceding the date of this report were:

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A majority of Amcor’s revenue and earnings are derived from assets and operations outside of Australia, and those assets, revenue and earnings are denominated in foreign currencies. Most of these are denominated either in US dollars or Euros. Therefore, because Amcor presents its financial statements in A$, appreciation of the A$ against the US$ or the Euro will adversely affect the A$ amount of those assets, revenue and earnings. In addition, fluctuations in the exchange rate between A$ and US$ or Euros will affect the US$ or Euro equivalent of the A$ price of our shares on the ASX and the US$ or Euro value of any cash distributions paid on the shares in A$. Following our acquisition of assets from Schmalbach-Lubeca AG (Schmalbach), these effects are more pronounced because we have a greater percentage of our assets, revenue and earnings denominated in US$ and Euros following the acquisition than we had previously.

Fluctuations in the A$/US$ exchange rate will affect the US$ equivalent of the A$ price of Ordinary Shares on the ASX and, as a result, are likely to affect the market price of the our American Depositary Shares (“ADSs”) in the United States.  Such fluctuations would also affect the US$ amounts received by holders of ADSs on conversion by the depositary of cash dividends paid in A$ on the Ordinary Shares underlying the ADSs (see Item 3 – Risk Factors).

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Selected Financial Data

The following table sets out our selected historical financial data. The selected historical financial data at June 30, 2002 and 2003, and for years ended June 30, 2001, 2002 and 2003, have been derived from our audited consolidated financial statements included in this annual report. The selected historical financial data at June 30, 1999, 2000 and 2001 and for years ended June 30, 1999 and 2000 have been derived from our audited consolidated financial statements not included in this annual report. Amcor’s audited consolidated financial statements are prepared in accordance with A-GAAP, which varies in certain respects from US-GAAP.  See Note 35 to the consolidated financial statements for a discussion of the significant differences between A-GAAP and US-GAAP as they apply to Amcor for the periods presented therein. Revenue and expense items previously disclosed as abnormal are no longer identified separately in the income statement data due to a change in Australian accounting standards.

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(1)                                 Income statement data and balance sheet data have been translated at the noon buying rate on June 30, 2003 of 
A$1.00 = US$0.6671.

(2)       Other revenue includes interest received, share of associates’ net profit, and proceeds on disposal of non-current assets, subsidiaries and businesses. See Note 2 to the consolidated financial statements.

(3)                                 Cost of goods incurred in generating sales revenue only (not other revenue).

(4)                                 Includes costs incurred in generating other revenue.

(5)                                 Borrowing costs less interest received.

(6)                                 Dividends have been translated into U.S. dollars at the noon buying rate on the date of payment, except for the 2002-03 final dividend of A$0.15 per Ordinary Share, payable on October 1, 2003, which has been translated at the June 30, 2003 noon buying rate of A$1.00 = US$0.6671.

(7)                                 Includes A$446 million of subordinated convertible unsecured notes which have no maturity dates.  These notes are subordinated to all other obligations of Amcor save for issued capital.

(8)                                 PBITA excluding significant items divided by net interest (including interest on perpetual Amcor convertible reset securities (PACRS)).

(9)                                 Includes undated subordinated convertible securities, partly-paid ordinary shares and PACRS.

Risk Factors

General Economic Conditions

Amcor’s business may be affected by general economic conditions within Australia and globally (including, for example, government fiscal, monetary and regulatory policies, interest rates, tax rates, foreign exchange rates, oil prices, inflation and the industrial relations environment). Changes in the economic conditions in markets in which we operate may result in customers changing spending patterns and their level of general consumption, which may have a material adverse effect on our operating and financial performance.

Technology

We operate in highly competitive business segments. Our industry continues to change in response to technological innovations and other factors. We cannot predict with certainty the changes that may affect our competitiveness. In particular, Polyethylene Terephthalate (which we will refer to as PET) product design and development may be subject to rapid technological change. We cannot predict whether technological innovations will make some of our products, production processes or distribution techniques wholly or partially obsolete. If this were to occur, we may be required to invest significant resources to further adapt to the changing competitive environment. In such a case the investments could negatively affect our profitability and results of operations.

Increased or New Competition

While we have a strong position in each of our key market segments (both in Australia and internationally), new competitors may emerge in the market and potential rivals may seek to increase market share. Price competition may have the effect of reducing margins and profitability.

Laws and Regulations

Our operations could be affected by government actions such as controls on prices, new forms of taxation and increased government regulation in the countries in which we operate. We also operate in some countries that pose political risks including civil unrest, nationalisation and changes in laws and policy. These political risks could have an adverse impact on the profitability of our operations.

Amcor is subject to environmental regulation in relation to our manufacturing activities and we are subjected periodically to internal, independent external and government agency audits and site inspections.

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Exchange Rates

We are exposed to movement in exchange rates of foreign currencies – mainly the US$ and the Euro. However, as we do not currently repatriate foreign profits, there is no currency gain or loss in real terms; it is a translated effect only. We estimate that if there is a one cent change in the US$ or the Euro over a full year, the impact on net profit would be approximately A$1.5 million or A$2.5 million respectively.

Environmental

Amcor’s worldwide manufacturing operations are subject to extensive environmental regulation. We believe that we are currently substantially in compliance with these regulations. However, although compliance costs in future years will depend on legislative and technological developments which cannot be accurately predicted, Amcor believes the costs of compliance with environmental laws and regulations will increase as these laws and regulations become more stringent. These laws and regulations may, therefore have an unpredictable and adverse effect on our operations and profits.

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ITEM 4  INFORMATION ON THE COMPANY

The discussion below contains certain forward-looking statements. Amcor’s actual results could differ materially from those anticipated by those forward-looking statements due to a variety of factors, including those set forth under “Forward-Looking Statements”, “Risk Factors” and elsewhere in this annual report.

General

Amcor Limited is a public company with limited liability incorporated in New South Wales, Australia under the Australian Corporations Act (2001). We are a leading global packaging group with annual sales of approximately A$10.7 billion. We are headquartered in Australia and have operations in Australia, New Zealand, Asia, Europe and the Americas. At December 12, 2003, our market capitalization was approximately A$8.0 billion, making us one of the 25 largest public companies in Australia, by capitalization.

Amcor offers a broad range of plastic, fibre, metal and glass packaging products along with packaging-related services. For management reporting purposes Amcor’s business is split either regionally to reflect the geographic areas in which it operates or along business lines when the business is strong in a number of geographical regions. In Australia and New Zealand, Amcor has developed a business with a broad product offering and the ability to provide a wide range of packaging and associated services. Internationally, Amcor has built a packaging business based on a smaller number of packaging segments.

Approximately 23% of Amcor’s sales were derived from Australasia in 2002-03 compared with 32% in 2001-02.  Amcor continues to maintain a strong market position and competitive advantage for many of our products in Australia where, although competition is intense, our major markets can be largely characterized as having a limited number of major domestic participants, with competition from imports in certain markets.  Over the past ten years, Amcor has generated substantial growth in both our non-fiber based packaging operations and our operations outside Australia.  For the year ended June 30, 2003, 77% of our sales were derived from North/Latin America, Europe and Asia.

Amcor’s acquisition of the Schmalbach businesses on July 1, 2002 was the most significant factor in the percentage of sales outside Australasia increasing during the twelve months to June 2003.

Recent Developments

Purchase of PET Assets in Mexico

Amcor announced on November 5, 2003 that it had entered into an agreement to purchase the PET injection and blow moulding assets of Embotelladoras Arca S.A. de C.V. (Arca) and supply bottles to Arca with an initial supply agreement of eight years. Amcor will purchase the PET on site injection and blow moulding assets of Arca for around A$60 million which will be paid in yearly instalments throughout the life of the contract.

Board Changes

The Chairman of Amcor Limited, Mr Chris Roberts, announced on September 23, 2003 that Mr G J (John) Pizzey has accepted an invitation to join the Amcor Board, effective September 23, 2003.

Mr Roberts also announced the resignation from the Amcor Board of Mr T C Bergman, effective October 23, 2003.

Purchase of Amcor Flexibles Europe Minorities

On August 21, 2003 Amcor announced that it had purchased the 28.1% minority stake in Amcor Flexibles Europe from Danisco and Ahlstrom for €99.5 million (A$173 million), effective from July 1, 2003. The purchase price represented 6.4 times the 2002-03 PBITDA less debt and Amcor expects the acquisition to be earnings per share positive in 2003-04.

Acquisition of Rexam’s Healthcare Flexibles Packaging Operations

Amcor also announced on August 21, 2003 that it had entered into an agreement to purchase Rexam plc’s (Rexam) healthcare flexibles business for A$330 million. The business, which has annual sales of approximately A$390 million, has ten plants in six countries – five in the United States and one each in England, Ireland, France, Singapore and Brazil.

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The acquisition is consistent with Amcor’s strategy of targeting higher value added and higher growth market segments. The five plants in the United States will increase Amcor’s presence in that country and are expected to provide a solid base in a high value business from which to build.

The purchase price represents a multiple of 6.5 times the previous 12 months PBITDA.

Refinancing of Global Multi-Currency Debt Facility

In June 2003, Amcor refinanced its global multi-currency bank debt facility by increasing the overall facility limit to US$1 billion (previously US$555 million) and extending the life of the term component to five years.

The increase in the facility will be used to replace borrowings under other debt facilities maturing in future months, to provide required back-up for commercial paper programs and to provide additional general corporate debt facilities to the Amcor Group, which is now significantly larger following the acquisition of Schmalbach-Lubeca’s PET and closures businesses in July 2002.

Purchase of Alcoa’s Latin American PET Packaging Business

In June 2003 Amcor entered into a binding agreement to purchase Alcoa’s Latin American PET packaging business for US$75 million. The purchase price represents approximately 4.8 times the previous 12 months’ PBITDA.

Alcoa’s Latin American PET business consisted of nine production facilities located across Brazil, Argentina, Columbia, Peru, Uruguay and Chile. Sales were approximately A$200 million in 2002.

A$125 Million Wine Bottle Plant Expansion

Amcor announced in March 2003 that it is building a second furnace on its existing wine bottle facility in Gawler, South Australia. The new furnace, which will cost A$125 million and have a capacity of 200 million wine bottles per year, is expected to commence output by mid-2005.

The building of the second furnace will increase production at the Gawler site to 400 million bottles per year. The strong customer demand for Amcor’s wine bottles has enabled new long term supply contracts to be both extended and upgraded and has underpinned demand for the new furnace.

Sale of Joint Venture Stake in White Cap North American Closure Operations

In January 2003, Amcor entered into a definitive agreement to sell its 65% stake in Amcor White Cap LLC to Silgan Holdings Inc, its 35% joint venture partner. The joint venture, which consisted of seven plants, six in the United States and one in Mexico, was sold for A$66 million – equivalent to book value.

Amcor plans to continue developing its position in the plastic closures market in North America through its joint venture partner, Bericap and will also retain 100% of the European and Asian metal closures operations as well as small facilities in Brazil and Venezuela.

US$500 Million Private Placement

In December 2002, Amcor successfully completed arrangements for a US$500 million private placement of debt securities to US-based institutional investors. The placement was done in tranches of seven, ten, 12 and 15 years (average duration – 11.5 years) at a weighted average interest rate of 5.8%.

The placement was made in two instalments with US$350 million being used immediately to replace the bridge finance facility established at the time of the Schmalbach-Lubeca acquisition and a further US$150 million refinancing notes that matured in June 2003.

Amcor’s Strategy

Amcor’s aim is to be a global leader in the packaging industry, targeting specific segments predominantly in the food and beverage industries.

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In Australia and New Zealand, Amcor has a leading presence with a broad product offering and is the number one or number two supplier in most segments in which it participates (see Competition). Over the past three years, Amcor’s Australian and New Zealand businesses have delivered a stable earnings stream.

Outside of Australia and New Zealand, Amcor’s strategy is to be a leader in specific segments. These segments are:

•                  flexible packaging for the food, beverage, healthcare and industrial markets;

•                  PET bottles and jars for beverage and food applications;

•    ��             specialty printed cartons for tobacco, confectionery and health and beauty markets;

•                  distribution of packaging products and related goods; and

•                  specialty plastic packaging for closures, tubes and thermoformed rigid plastics.

Amcor believes that all these segments are attractive because they exhibit three key characteristics:

•                  prospects of higher than industry average growth;

•                  the ability to create value-added products and services, which provides the opportunity for Amcor to differentiate itself from its competitors; and

•                  the ability to obtain a leading presence, either regionally or globally.

Amcor has implemented this strategy through a number of transactions that have reshaped it over the last two years. The most significant of these include:

•                  the creation in June 2001 of the leading European flexible packaging business through a three way joint venture between Amcor Flexibles Europe, Danisco Flexible and Ahlstrom and the subsequent purchase of the minority stake in July 2003; and

•                  the acquisition in July 2002 of the PET Container and closures operations of Schmalbach-Lubeca.

The Schmalbach businesses represented an attractive opportunity that was consistent with Amcor’s strategy. In acquiring these businesses, Amcor has become the leading manufacturer of PET containers globally. Additionally, the acquisition has allowed us to expand our activities in segments that exhibit higher than average industry growth and the ability to offer a greater number of value-added products.

Businesses

The chart set out below describes our organizational structure as at June 30, 2003.

Amcor operates its business through six main divisions:

Amcor PET Packaging manufactures PET containers and preforms and provides them to consumer goods companies worldwide.

Amcor Australasia manufactures metal, plastic, fibre and glass packaging throughout Australia and New Zealand.

Amcor Flexibles Europe is a manufacturer of flexible packaging, servicing a range of food, beverage, healthcare and industrial segments.

Amcor Sunclipse, based in California, is a manufacturer and distributor of industrial packaging supplies and related products and services.

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Amcor Rentsch & Closures

•Amcor Rentsch is a producer of specialty folding cartons for the tobacco, cosmetics and confectionery industries.

•Amcor Closures manufactures plastic and metal closures as well as rigid tubs and plastic tubes.

Amcor Asia, headquartered in Singapore, is a supplier of corrugated and tobacco packaging, closures, flexible packaging and paper sacks.

Background

Amcor’s history dates back to the 1860s and Australia’s first paper making activities.  Until 1980, Amcor was almost exclusively a forestry, pulp and paper company in Australia.  Since that time, however, Amcor implemented a major program of expansion that resulted in a shift away from sole reliance on pulp and paper products in Australia and the development of a diversified and integrated international packaging and paper company. Amcor has grown through a combination of acquisitions, “greenfield” developments where suitable acquisitions could not be obtained and expansion of capacity of existing businesses.

After a two year rationalisation and restructuring program in 1997-98 and 1998-99, when a number of non-core or under-performing businesses were disposed of, Amcor demerged its paper manufacturing and fine paper distribution businesses in April 2000 following shareholder and court approval. In May 2001, Amcor announced its intention to sell its 50% investment in Kimberly-Clark Australia Pty Ltd (KCA). The demerger and sale of KCA were strategic initiatives intended to enable Amcor to realize its goal of becoming a leading global packaging company by enhancing Amcor’s ability to pursue opportunities to further develop its businesses in new products, services and markets. The acquisition of Schmalbach-Lubeca assets in July 2002 was our latest step in implementing this strategy.

At June 30, 2003, Amcor had approximately 28,600 employees at 212 manufacturing plants and 38 distribution facilities in 37 countries and 121,600 shareholders, including more than 14,200 employee shareholders.

The manufacturing plants by business are as follows:

Following the purchase of Alcoa’s Latin American PET packaging business and the acquisition of Rexam’s healthcare flexible packaging operations (see Recent Developments), Amcor has 238 manufacturing plants and 38 distribution facilities in 42 countries.

Our principal office is located at 679 Victoria Street, Abbotsford, Victoria 3067, Australia, and our telephone number is (61-3) 9226-9000.

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Amcor’s Significant Subsidiaries as at December 12, 2003

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Amcor PET Packaging

In July 2002 Amcor acquired the PET Containers business of Schmalbach-Lubeca. The Amcor PET Packaging business was formed following the integration of this PET business with Amcor Twinpak’s PET operations.

Amcor PET Packaging has a broad product portfolio ranging from preforms and containers for carbonated soft drinks and water applications and custom products – ie other beverage and food segments. Products manufactured include PET bottles for carbonated soft drinks, mineral water, juices, spirits and beer, milk and other dairy products, PET containers for hot-filled drinks and food products, PET containers for household chemicals, preforms (for moulding by customers) and recycled PET materials.

PET containers have been a growing packaging segment for over 20 years and future growth is expected to continue. The demand growth is driven by lifestyle changes, increasing bottled water requirements, substitution of PET for glass in food applications such as sauces and jellies and continuing growth in carbonated soft drinks. Excluding the acquisition of Alcoa’s PET operations in Latin America (see Recent Developments), US$120 million expenditure was approved in 2002-03 by the Amcor Board to install an additional 26 injection moulding machines and 29 blow moulding machines.

The business has 50 manufacturing locations on five continents across 20 countries together with research and development and recycling facilities in both the US and Europe.

Amcor Australasia

Amcor Australasia is based in Melbourne, Australia and operates from 74 facilities and employs more than 7,100 people. Major manufacturing sites include 13 corrugated box plants, 13 metal packaging plants, 13 flexible and plastic packaging plants, 13 carton and sack plants, four paper mills and a glass plant.

The business is a manufacturer of metal and flexible packaging in Australia and New Zealand. Products made in both countries include aluminium beverage and aerosol cans, steel cans for food and aerosols, flexible and film packaging, PET plastic bottles and jars and plastic closures. In Australia, the business also makes metal and plastic caps and closures and multi-wall sacks.

Amcor also has a glass packaging business, which commenced operations in July 2002 and produces 600,000 wine bottles per day that it is supplying to a growing number of wine companies (including all the major wine producers) in Australia.

Amcor Australasia’s fibre packaging business manufactures packaging for food, beverages, household products and a range of industrial uses. It also sells paper and board to other packaging companies as well as plasterboard liner and functionally-coated packaging papers. The four paper mills supply the corrugated box and carton operations and satisfy the majority of their recycled paper requirements from within Australia.

Amcor Flexibles Europe (AFE)

AFE is a manufacturer of flexible packaging and services a range of food and beverage segments including confectionery, coffee, fresh food and dairy as well as high value-added medical applications and other non-food products. Headquartered in the UK, it has over 6,700 employees and 41 plants in 15 European countries and is also responsible for Amcor’s US flexibles operation.

AFE, which was formed following the merger of Amcor’s flexible businesses in Europe with the flexible packaging operations of Danisco and Ahlstrom. The acquisition of Rexam’s food flexible packaging business in January 2002 and the purchase of Tobepal’s Spanish flexible packaging and extrusion operations in June 2002 significantly increased its market position in the bakery and produce sectors in the United Kingdom and the pharmaceutical and healthcare markets across Europe.

The announcements in August 2003 of Amcor’s purchase of the minority stake in AFE from Danisco and Ahlstrom and of the agreement to acquire Rexam’s medical and healthcare flexible business (see Recent Developments) are expected to further consolidate AFE’s position in Europe’s flexible packaging sector.

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Amcor Sunclipse

The Amcor Sunclipse business is made up of both manufacturing and distribution operations. The manufacturing business produces corrugated board and boxes and consists of three corrugated sheet operations and 11 manufactured packaging product facilities.  The distribution group, known as the Kent H. Landsberg Company, operates 34 distribution centres in the US and four in Mexico and includes all types of industrial and janitorial supplies including flexible packaging.

Amcor Rentsch and Closures

Amcor Rentsch, headquartered in Switzerland, is a leading producer of specialty folding cartons for tobacco, cosmetics and confectioneries. It has manufacturing plants in eight countries – Switzerland, France, Germany, Republic of Ireland, Poland, Portugal, Russia and Spain.

As previously disclosed (see Recent Developments) following the sale of the closures business in North America to Silgan Holdings Inc, Ken MacKenzie was appointed to the new position of Managing Director, Amcor Rentsch and Closures. The closures business, which is now headquartered in Switzerland also, consists of 10 metal and plastic closure plants in nine countries as well as the specialty packaging businesses of rigid tubs and plastic tubes.

Amcor Asia

Amcor Asia, based in Singapore, has 15 manufacturing plants spanning five countries - Singapore, Malaysia, Indonesia, Thailand and China. The business does not include the PET or closure operations (other than the joint venture in Thailand) that are in the Asian region as these are managed by and reported in the respective PET and Closures segments.

Amcor Asia’s plants are located as follows:

•                  Singapore – one corrugated box plant, one tobacco packaging plant and one multiwall sack plant.

•                  Malaysia – three corrugated box plants and one tobacco packaging plant.

•                  Indonesia – one corrugated box plant (55% interest in a joint venture) and one multiwall sack plant.

•                  China – two tobacco packaging plants (83% and 60% interests in joint ventures), two flexible packaging plants, and one corrugated box plant.

•                  Thailand – one closures plant (51% interest in a joint venture).

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Capital Expenditure

Capital expenditure refers to expenditure on property, plant and equipment and excludes acquisition of controlled entities and businesses. Net capital expenditure is arrived at after deducting proceeds on disposal of property, plant and equipment and does not include proceeds on disposal of controlled entities, businesses and investments.

2002-03

Capital expenditure on property, plant and equipment in 2002-03 totalled A$890 million; net capital expenditure was A$832 million after deducting the A$58 million proceeds received on the disposal of property, plant and equipment.

Expenditure in 2002-03 included outlays on the following major items:

•                  expansion of PET Packaging’s injection moulding and blow moulding capacity;

•                  upgrade of paper mill in Queensland, Australia to improve board quality;

•                  expansion of plastic closure capacity in Poland

2001-02

Net capital expenditure was A$144 million in 2001-02. Acquisition of property, plant and equipment totalled A$351 million and the proceeds on disposal of property, plant and equipment was A$207 million for the year to June 2002.

Major items of capital expenditure included:

•                  expansion of the PET business in Canada;

•                  purchase and installation of a flexo press for Amcor Australasia at Scoresby Preprint, Victoria, Australia; and

•                  purchase of blowmould machines for CNC Containers at Arizona and Washington, USA.

2000-01

Net capital expenditure totalled A$263 million in 2000-01. Capital expenditure on property, plant and equipment of A$289 million was offset by proceeds on disposal of A$26 million.

•                  upgrade of corrugators at Victorian and New South Wales plants in Australia;

•                  development of Amcor Australasia’s E-Business; and

•                  relocation of the Spanish flexible packaging operation to a new greenfield site.

Environmental and Other Regulations

The regulatory constraints on Amcor’s businesses and growth include, among many other such regulations, compliance with:

•                  the Australian Corporations Act 2001 and other jurisdictions’ corporate regulations;

•                  labor legislation;

•                  the provisions of the Australian and other jurisdictions’ Trade Practices Acts;

•                  numerous acts relating to workers’ compensation and rehabilitation, occupational health and safety, dangerous goods handling; and

•                  environmental regulations of various kinds.

Amcor’s worldwide manufacturing operations are subject to extensive environmental regulation. Amcor believes it is substantially in compliance with these regulations. During 2002-03, Amcor had three environmental incidents. There were two chemical spills from flexibles plants in Europe and an air pollution breach in relation to the discharge of offensive odours from a paper mill in Victoria, Australia. The European sites have co-operated fully with authorities and have made improvements to minimize the potential for future spills. With regards to the paper mill breach, Amcor was ordered to pay A$45,000 to the local council to contribute to the funding of restoration works. Amcor has also committed to an upgrade of the plant which is anticipated to reduce the generation and impact of odours upon neighbouring residents.

Amcor’s current environmental system is based on International Standard ISO 14001. A detailed program of environmental auditing provides feedback on the effectiveness of the management system and includes site inspections and assessments of environmental risk. Amcor’s environmental performance is monitored regularly by management and the Board and is a component of performance appraisal and management remuneration.

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Amcor’s environmental objectives are:

•                  all major manufacturing sites to be certified to ISO 14001;

•                  reduction in energy per unit of product; and

•                  reduction in waste to landfill per unit of product.

All higher risk manufacturing sites that were acquired more than three years ago have obtained certification to ISO 14001. More recently acquired higher risk businesses are required to achieve certification within three years of acquisition. Several lower risk businesses have also chosen to become certified as a way to demonstrate their environmental commitment. The lower risk sites are implementing systems using the Amcor Environmental Management Manual, which is based on ISO 14001.

The Dow Jones Sustainability Index includes the top 10% of the world’s leading sustainability companies. “Sustainability” encompasses a company’s activities, performance and contribution in regard to environment, safety and the community, without compromising the needs of future generations. Amcor was assessed against other packaging companies and was successful in being included in the 2003 Index.

Amcor is committed to recycling and is actively involved in recycling many of its products. Amcor Australasia is a recycler of packaging and glass and is involved with local supermarkets in the recycling of soft plastics, while Amcor PET Packaging operates two recycling plants, one in the United States and the other in France.

As a signatory to the National Packaging Covenant in Australia, Amcor has prepared an action plan to reduce the environmental impact of its products. The actions include an ongoing commitment to kerb-side recycling and product design and manufacture.

Labor Relations

At June 30, 2003, Amcor employed approximately 28,600 persons at 250 locations around Australia and overseas.  Given the number of plants and types of businesses in which Amcor is engaged, labor relations are necessarily characterized by numerous separate arrangements within individual businesses. This characteristic has, however, been heightened in recent years by the Australia-wide trend away from industry-based wage fixation to enterprise agreements based on productivity and performance.  The major unions which represent employees of Amcor’s companies in Australia are the Amalgamated Metal Workers’ Union, the Printing and Kindred Industries Union, the Construction Forestry Mining Energy Union and the National Union of Workers. Amcor believes it is in substantial compliance with all industry and labor awards relevant to its employees and that its relationships with its employees are good. (See Item 8 – Financial Information – Legal Proceedings).

Safety

Amcor’s goal is to ensure that no one who works for Amcor is ever injured and it has developed extensive procedures and practices to safeguard its people. Amcor’s lost time injury frequency rate (number of lost time injuries per million hours worked) improved from 3.8 times for the twelve months to June 2002 to 3.3 times for the year to June 2003; its recordable case frequency rate which is the number of medical treatments and lost time injuries per million hours worked also reduced – from 24.4 in the twelve months to June 2002 to 21.5 in the equivalent period to June 2003.

Regrettably, however, Amcor must report that during the year an employee was fatally injured while working on a paper machine at the Fairfield Mill in Australia.

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Research and Technology

In order to develop a competitive advantage through innovation, during the year to June 2003, Amcor launched a Product Leadership and Innovation (PLI) initiative which is based on leadership in developing profitable packaging solutions focusing on new products, product extensions and process improvements. Amcor’s research and development activities play an important role in developing this strategy.

In the twelve months to June 2003 Amcor has invested approximately A$106 million globally on research and development which is a significant increase on previous years due to the PLI strategy. A key focus in 2002-03 has been intellectual property which is crucial to the delivery of the PLI strategy and Amcor has ensured that this knowledge is protected by registration or confidentially agreements. Amcor currently has over 350 patents registered worldwide.

Examples of recent initiatives include Amcor Australasia’s re-close zip pouch, Amcor Flexibles Europe’s resealable flexible bag and Amcor PET Packaging’s new generation of lightweight heat-set bottles.

Competition

Similar to other industries, packaging has undergone considerable worldwide consolidation, resulting in significant structural changes to the competitive nature of the industry. Benchmark cost structures have fallen in a number of the industry sectors as a result of the consolidation that has occurred, which in turn has placed downward pressure on product pricing.

Amcor PET Packaging

Amcor believes it is the global leader in the manufacture of PET containers and estimates it has a global market share of approximately 12 per cent. Management also believes that Amcor’s geographic spread and comparatively efficient operations make it a strong competitor.

Amcor Australasia

Excluding fibre based packaging, Amcor Australasia’s remaining businesses are divided into seven separate markets: (i) beverage cans (beer and soft drinks), (ii) food cans, (iii) flexible/PET plastics, (iv) aerosol cans, (v) closures, (vi) multi-wall sacks and (vii) glass wine bottles. These businesses compete directly with manufacturers and importers of similar products while, at the same time, dealing with indirect competition from other forms of packaging. They compete principally on the basis of reliability of delivery, product quality, innovation and price.

The following estimates of market share have been made by Amcor analysts with assistance from information provided by BIS Shrapnel.

Amcor estimates that it has about a 67% share of the Australian beverage can market for beer and soft drinks, supplying three of the four major consumers.  In food cans within Australia and New Zealand, Amcor estimates that it holds approximately 45% share of the market with only one other competitor.

Amcor is one of only two manufacturers in Australia supplying glass bottles to the wine industry. Amcor’s annual production capacity of over 200 million bottles gives it a market share of about 23%.

The Australasian corrugated box market is shared principally by Amcor and one other major manufacturer, each holding between 40% to 45% of the market.

The cartonboard market consists primarily of packaging for grocery consumer products.  In Australia, there are five other major converters of cartonboard packaging, all of whom compete with Amcor.

Amcor Flexibles Europe

The three-way merger of Amcor Flexibles Europe, Danisco Flexible and Akerlund & Rausing in June 2001 has brought together three of the top seven flexible packaging companies in Europe to create a new market leader with sales in 2002-03 of more than A$2 billion. Around 80% of sales are in the relatively stable food and beverage industries. The business has a broad customer base with the largest customer representing about 4% of total sales.

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Amcor’s purchase of the minority stake in Amcor Flexibles Europe (see Recent Developments), announced in August 2003 is expected to strengthen this competitive position.

Amcor Sunclipse

In California, Amcor’s corrugated box and sheet plants face solid competition from other local producers. Sunclipse is attempting to combat this increased competition by providing a higher standard of customer service through improved operating systems.

The distribution market in the US and Mexico remains very competitive.

Amcor Rentsch and Closures

Amcor Rentsch is heavily focussed on the tobacco packaging business in existing and emerging European markets. It has also continued its development of specialty folding cartons for the cosmetics and confectionery industries.

The global closures industry is highly fragmented (particularly in plastic closures). The leading five producers worldwide currently represent less than 20% of total sales.

Amcor Asia

In Asia, Amcor’s corrugated fiber box plants face significant competition from established local producers. The corrugating market is also faced with excess capacity.

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Sales Revenue by Geographic, Business and Industry Segments

The table below shows Amcor’s sales revenue by geographic, business and industry category for the last three financial years. See also Operating and Financial Review and Prospects for a discussion of revenue performance during the last three years.

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Property, Plant and Equipment

At December 12, 2003, Amcor operated manufacturing and distribution facilities in the 42 countries listed in the following table.

Amcor believes that its facilities are suitable and adequate for its present needs and are generally well maintained and in good operating condition. Amcor carries insurance covering property, casualty and certain other risks to which its worldwide facilities and operations may be subject.

113 of Amcor’s principal manufacturing and distribution facilities are owned. Those facilities which are not owned are leased by Amcor for periods varying from one to 10 years.  Amcor does not believe any of its businesses is dependent on any single facility.

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ITEM 5  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The discussion below contains certain forward-looking statements. Amcor’s actual results could differ materially from those anticipated by those forward-looking statements due to a variety of factors, including those set forth under “Forward-Looking Statements”, “Risk Factors” and elsewhere in this Annual Report.

Changes to Senior Management

In February 2003, James Allen, President and Chief Executive Officer of Amcor Closures announced his decision to retire from the Amcor Group, with effect from July 2003. As of April 2003, Ken MacKenzie became Group Managing Director Amcor Rentsch and Closures.

In May 2003, Amcor announced that Peter Brown, Managing Director, Amcor Australasia had decided to retire, effective December 31, 2003. Peter Sutton, currently Group General Manager of Plastic Packaging and Food Cans with Amcor Australasia will succeed Peter Brown. Subsequent to this announcement, Amcor and Peter Brown mutually agreed that his retirement would become effective on September 30, 2003. Consequently, Peter Sutton assumed his role as Managing Director, Amcor Australasia, from October 1, 2003.

Critical Accounting Policies (refer F-11 – Note 1 Accounting Policies)

Amcor’s consolidated financial statements have been prepared in accordance with Australian GAAP. Our significant accounting policies are more fully described in Note 1 to our financial statements. The preparation of our financial statements requires management to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. We continually evaluate our estimates and judgements including those related to bad debts, inventories, intangible assets, income taxes, financing activities, restructuring costs, contingencies and litigation. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. This forms the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions.

Our accounting policies have been developed over many years as generally accepted accounting principles or “GAAP” have evolved. As our financial statements are prepared under A-GAAP our accounting policies are necessarily compliant with all aspects of A-GAAP. A-GAAP is based on a ‘substance over form’ conceptual framework that requires us to look through the legal interpretation of an arrangement or transaction to its underlying purpose and to reflect it in our financial statements on that basis.

Changes in Amcor’s accounting policies generally reflect changes to currently applicable Australian Accounting Standards and disclosure requirements of Australia’s professional accounting bodies. These changes are described in Note 1 to our financial statements, as are the financial effects of these changes in the current or prior periods.

In developing accounting policies, in addition to A-GAAP requirements, we also consider industry practice. Where there is no conflict with A-GAAP we also align our accounting policies with US-GAAP. This reduces the number of A-GAAP/US-GAAP reconciliation differences required to be adjusted in Note 35 to our financial statements.

In all material respects our accounting policies are applied consistently across Amcor. The critical accounting policies discussed below generally apply to all segments of Amcor. Management has discussed the development and selection of these critical accounting policies with the audit and compliance committee of our board of directors. The following are the critical accounting policies we apply in producing our A-GAAP financial statements.

Recovery of Long-lived Assets

Long-lived assets, consisting primarily of property, plant and equipment and intangibles, comprise a significant portion of Amcor’s total assets. Changes in the intended use of these assets may cause the estimated period of use or the value of these assets to change.

Long-lived assets, including goodwill and intangibles, are reviewed for impairment whenever events or changes in circumstances have indicated that changes in their carrying amounts may not be recoverable. Estimates and assumptions used in both setting depreciable lives and testing for recoverability require both judgements and estimations. Property assets are independently valued on an ‘existing use’ basis every three years and we assess the recoverable amounts of our plant and equipment bi-annually, based on a detailed analysis of the current

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replacement cost of plant and equipment at each business location. We assess the carrying value of acquired goodwill for impairment at least annually based on its recoverable amount. Our assessments include methodologies such as earnings multiples. If earnings and earnings multiples change, Amcor may have to record additional impairment charges not previously recognized.

Acquisition Accounting

In future years, Amcor may continue to grow our business through acquisitions, such as the Schmalbach acquisition. Amcor accounts for the acquisitions using the purchase method of accounting. The accounting for business acquisitions is complicated and involves the use of significant judgement.

Under the purchase method of accounting, a business acquisition is accounted for at a purchase price based upon the fair value of the consideration given, whether it is in the form of cash, assets, stock or the assumption of liabilities. The assets and liabilities acquired are measured at their fair values, and the purchase price is allocated to the assets and liabilities based upon these fair values. Determining the fair values of the assets and liabilities involves the use of judgement, since the majority of the assets and liabilities acquired do not have fair values that are readily determinable. Different techniques may be used to determine fair values, including market prices, where available, appraisals, comparisons to transactions for similar assets and liabilities and present value of estimated future cash flows. Since these estimates involve the use of significant judgement, they can change as new information becomes available.

Capitalisation of Costs

When we incur costs, we classify them as either operating expenses or capital costs. We expense operating expenses to the statement of financial performance as they are incurred. We only capitalise costs where we consider that they will generate future economic benefits. Capital costs are recorded as assets and shown in our statement of financial position based on the asset class considered most appropriate to those costs. Management judgement and accounting policy guidelines are used in determining costs to be capitalised.

Doubtful Debts

We maintain provisions for doubtful debts based on an estimate of the inability of our customers to pay amounts due to us. These provisions are based on historical trends and management’s assessment of general economic conditions. If the financial condition of our customers deteriorates these provisions may not be sufficient and may lead to an increase in bad and doubtful debt expenses. We have no reason to believe that the provisions we have raised will not sufficiently cover bad debts arising out of the receivables we currently have on hand. Our provision for doubtful debts was A$60 million at June 30, 2003, A$42 million at June 30, 2002 and A$41 million at June 30, 2001. Trade debtors before any provision for doubtful debts were A$1,163 million at June 30, 2003, A$1,122 million at June 30, 2002 and A$1,108 million at June 30, 2001.

Slow Moving and Obsolete Inventory

Amcor’s policy is to maintain a provision for slow moving and obsolete inventory based on our best estimate of such amounts at year-end. We base our estimate on a systematic, on-going review and evaluation of inventory balances. As part of this evaluation, we also consider the average age of the inventory as compared to anticipated necessary levels for future periods. We believe that the accounting estimate related to the establishment of a provision for slow moving and obsolete inventory is a critical accounting estimate because the evaluation is inherently judgemental and requires the use of significant judgements about expected future sales levels which may be susceptible to significant change.

Amcor’s inventories are valued at the lower of cost (including an appropriate proportion of fixed and variable overheads) and net realisable value in the normal course of business.

Our provision for diminution in value of inventories was A$72 million at June 30, 2003, A$58 million at June 30, 2002 and A$54 million at June 30, 2001. Total value of inventories before any provision for diminution were A$1,356 million at June 30, 2003, A$1,003 at June 30, 2002 and A$1,035 at June 30, 2001.

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Results of Operations

The following discussion is based on Amcor’s consolidated financial statements as prepared under A-GAAP.  A discussion of the differences between A-GAAP and US-GAAP, and the impact of those differences on the consolidated financial statements, is set out in Note 35 to the consolidated financial statements.

The results the businesses have achieved in 2002-03, 2001-02 and 2000-01 are presented in the table below:

(1)          The individual geographic and industry segments’ profit results refer to profit before interest, tax and amortisation, excluding significant items (PBITA).

(2)          Details of significant items are as follows:

•                  2003 – restructuring expenses following acquisition of Schmalbach assets – A$86.7 million.

•                  2002 – loss on disposal of tobacco packaging business in Canary Islands – A$18.6 million; profit on disposal of balance of investment in KCA – A$553.4 million.

•                  2001 – loss on disposal of Amcor Flexibles Inc – A$24.2 million; profit on disposal of 10% of investment in KCA – A$61.2 million.

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Year Ended June 30, 2003 Compared with Year Ended June 30, 2002

Consolidated Results of Operations

Amcor’s net profit after tax decreased from A$851.7 million in 2001-02 to A$361.3 million in 2002-03. The result in 2001-02 included a net significant gain of A$534.8 million, the majority of which related to the gain on sale of Amcor’s remaining holding in KCA.

The significant gain in 2001-02 of A$534.8 compares with a significant loss (after tax) in 2002-03 of A$70.1 million. This loss refers to the restructuring expenses consequent upon the acquisition of the PET and Closures businesses from Schmalbach.

Net profit after tax excluding significant items increased 36% from A$316.9 million in 2001-02 to A$431.4 million in 2002-03.

Sales revenue grew 43% from A$7.5 billion in 2001-02 to A$10.7 billion in 2002-03 mainly as a consequence of the increased sales in Amcor PET Packaging and Amcor Rentsch and Closures following the acquisition of Schmalbach in July 2002. Other revenue in 2001-02 of A$1.1 billion was A$0.8 billion more than 2002-03 due mainly to the disposal in 2001-02 of Amcor’s remaining 45% investment in KCA. Amcor’s share of associates’ net profit in 2001-02 was A$48 million but was zero in 2002-03 following the disposal of KCA.

Costs of goods sold in 2002-03 were 82% of sales revenue compared with 81% in 2001-02. Selling, general and administrative expenses increased 7.8% in 2002-03 to A$1,517 million compared with A$1,408 million in 2001-02. This majority of this increase could again be attributed to the Schmalbach acquisition.

Amcor’s average interest rate decreased in 2002-03 to 5.0% from 5.5% in 2001-02; however net interest increased to A$155.2 million in 2002-03 from A$121.5 million in 2001-02 due to the increase in debt levels following the Schmalbach acquisition.

Income tax expense decreased in 2002-03 to A$110.5 million from A$120.2 in 2001-02. This is explained in part by the profit on sale of our investment in KCA in 2001-02 having no tax effect while the restructuring costs following the Schmalbach acquisition in 2002-03 having a tax benefit of A$16.6 million.

Minority interests increased in 2002-03 from A$9.3 million to A$16.8 million, reflecting the improved profitability of Amcor Flexibles Europe. Following Amcor’s acquisition of AFE’s minorities from Danisco and Ahlstrom in August, 2003 (see Recent Developments), minority interests in future periods are expected to be negligible.

Amcor PET Packaging

Amcor PET Packaging had a strong year in 2002-03 with volumes up 11%, on a comparable year basis over 2001-02, to 27.7 billion containers.  Growth in the higher margin custom business was 27% with this business segment now representing 16% of total annual sales volume.

PBITA was up 286% in 2002-03 to A$306 million, reflecting the acquisition of Schmalbach-Lubeca assets as well as strong volume growth in all sectors of the market.

The business in the US showed particularly strong volume growth in 2002-03; it grew 23% over 2001-02 on a comparable basis.  This was due to underlying volume growth in the bottled water market and continued penetration of single serve juices and sports drinks.

In 2002-03 custom bottle growth was 25% over 2001-02 continuing the strong trend in this higher margin segment over the past few years.  The Canadian business experienced volume growth during the year of 12%, mainly attributable to increased demand in the water segment.

The North American business yielded an increase in PBITA in 2002-03 of 22% over the prior year on a comparable basis due to increased demand for PET bottles and the benefit of synergies.

In Latin America, overall volumes in 2002-03 were in line with the 2001-02.  In Mexico, volumes were up strongly, particularly in the higher margin custom business driven mainly by the rapid growth of sports drink and juice containers.

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In Brazil, volumes were down year on year due to a renewed focus on strategic customers, while in Argentina, the overall market is slowly recovering from the 2002 economic crisis.  For the Latin American region, PBITA in 2002-03 was ahead of 2001-02.

In Europe, volume growth in 2002-03 was 4% on a comparable basis, but with an improved performance in the second half where volumes were up 6%.  There was continued strong growth in the UK, France and Spain, while volumes in Germany were impacted by government deposit legislation and were well down on 2001-02.

PBITA in Europe for 2002-03 was up 18% on 2001-02, after being slightly lower in the first half.  The UK operations had a strong growth in profit, however the delayed start-up of the new recycling facility at Beaune in France had an adverse impact.  Elsewhere, volume and profit expectations where largely met and custom containers continue to grow as a percent of the overall product mix.

The PET business continues to experience new growth opportunities and during 2002-03 over US$120 million, excluding the acquisition of Alcoa’s PET operations in Latin America (see Recent Developments), was approved for expansion; this consisted of an additional 26 injection moulding machines and 29 blow moulding machines. This expenditure is expected to help underpin volume growth across all market segments, especially for the continued expansion in custom segments, and support cost reduction initiatives to combat expected market pricing pressures.

The 2002-03 year marks the first full year of operation after the acquisition of Schmalbach-Lubeca’s PET business. The business ends the year having completed its restructuring program (combining two plants in Southern California and upgrading the remaining plant and combining the Peru and Venezuela businesses) and implemented an integrated worldwide management structure.

Amcor Australasia

Amcor Australasia recorded another sound performance with sales up 4% from A$2.368 billion in 2001-02 to A$2.456 billion in 2002-03 and PBITA improving by 11.3% from A$254.2 million to A$282.8 million in 2002-03.

In the Fibre Packaging segment, corrugated box volumes were up 6%.  More settled industrial conditions in Australia underpinned volume growth of 7% with 2% volume growth in New Zealand.  Earnings improved both in Australia and New Zealand due to continued productivity gains, fibreboard rationalisation initiatives and price increases recovering cost increases.  Recent restructuring initiatives are expected to assist in further lowering our cost base and returns are expected to continue to improve.

The recycled paper mills’ buoyant first half continued with strong domestic demand while export pricing held their first half levels.  The mills continue to operate efficiently and were assisted by paperboard specification rationalisation. Wastepaper collections totalled 815,000 tonnes in 2002-03 up 4% on 2001-02.

The Folding Carton business consists of a paper mill at Petrie in Queensland, Australia as well as a number of conversion plants in Australia and New Zealand. The Petrie Mill experienced strong domestic demand and productivity levels, which offset some volume losses in the conversion business. During 2002-03 a $55 million upgrade was approved for the Petrie Mill to improve the board quality and in the conversion business there was a restructuring of operations, which included labour force reduction of 6%.  These initiatives are expected to underpin earnings growth and improving returns.

The Sacks business continues to focus on the dairy market, with innovative new products that reduce transport costs of bulk products.  The drought conditions impacted volumes in 2002-03, which were down 9% from 2001-02.  However, the new sack line in Victoria and strong customer support are expected to deliver improved returns in the coming year.

In Metal Packaging, the Beverage Can business had a solid year with volumes up 2% in 2002-03 on the previous year.  Pre-mixed alcoholic beverages and soft drink multipack promotions were the main drivers of growth.  Strategic capital investment totalling $30 million was approved for product development initiatives that include shaped and poly coated steel cans and a new low cost can end.

The Food Can business performed strongly in 2002-03 despite being impacted by drought conditions in Australia.  With the closure of the plant at Dandenong, Australia the business now has three focused manufacturing plants in the Goulburn Valley in Victoria, South Queensland and Hamilton, New Zealand.  Long-term supply contracts with major customers and a lower cost base are expected to improve earnings and returns in future periods.

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In Plastics, the Flexible Packaging business achieved volume growth of 3% in 2002-03, which was slightly below expectations due to the drought conditions affecting the dairy and produce segments of their market. Profit rose in 2002-03 compared with 2001-02 and with further capital investment targeted at cost reduction, a strong focus on product development together with synergies flowing from Amcor Flexible Europe, the business is positioned to deliver improved results in future periods.

The Glass wine bottle operation generated a positive profit contribution for the 2002-03 year.  A trouble free start up, strong customer support with sales above forecast levels and strong productivity levels were the key drivers to the profit contribution.  Current demand, which is underpinned by long-term supply agreements, is matching the existing capacity of the furnace.  Growth rates in the export wine market remain strong and during 2002-03 Amcor obtained customer support to enable the justification of a further investment of $125 million in a second furnace that is expected to come on stream in the first half of calendar year 2005 (see Recent Developments).

Amcor Flexibles Europe (AFE)

AFE continued to make strong progress in 2002-03 with PBITA up 43.3% on 2001-02 to A$133.6 million.  This performance was achieved in an environment of volatile raw material prices and uncertain economic conditions, particularly in France and Germany in the second half of the fiscal year.

The PBITA to sales margin improved from 4.7% in 2001-02 to 6.1% in 2002-03. Further improvements are expected to come from ongoing cost reductions and new product developments in future years.

The primary focus in 2002-03 was to improve the product mix to higher margin products and actively manage the impact of volatile raw material prices and as a result, volumes were flat. However, added value improved in all market sectors and raw material price increases were successfully managed through strong relationships with our customers and suppliers.

The two most recent acquisitions, Rexam Food Flexibles and Tobepal (see Recent Developments) were integrated into the AFE business successfully in 2002-03.

The portfolio restructuring programme, which commenced in 2001-02, continued during the year with the sale of the non-core Unibag business in Denmark and the acquisition of the Leaderpack (Portugal) minorities in July 2002, the closure of the Dutch Flexibles business at Haarlem in August 2002 and the closure of the small Synco operation in Belgium in December 2002.  Further minor restructuring continued at a number of plants with a resultant improvement in the operating cost base.  Synergy benefits from the three-way merger in June 2001 continue to remain ahead of expectations.

During the 2002-03 year great emphasis was placed on plant focus, product leadership and innovation (PLI) (see Research & Development) and customer service. The PLI strategy strengthened AFE’s market, customer and product portfolio. Improvements were also achieved in customer satisfaction, with service, quality and on-time deliveries contributing to stronger customer relationships.

The small North American flexibles business performed to expectations and, along with other non-European Amcor flexibles operations, is delivering synergy benefits from its association with a large European flexibles group.

The second half of 2002-03 saw softer demand due to economic weakness in France and Germany and, as a result, order books were generally weaker than anticipated going into the summer period.  However, AFE is expecting market focus and PLI strategy to continue to deliver performance improvements in an uncertain environment.

Industry consolidation is expected to continue in the European flexibles packaging industry and AFE intends being an active participant with the emphasis on value and strategic enhancement.

Amcor Sunclipse

For the 2002-03 year Amcor Sunclipse’s PBITA was flat in US$ terms, after being up 8% on 2001-02 in the first half.  In $A terms, PBITA in 2002-03 was down 10.9% compared with 2001-02.

The economy in the second half of 2002-03 was impacted by the war in Iraq, reducing demand across all segments of the business.

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In the manufacturing business, cost containment efforts were not able to keep up with reduced prices and margins and PBITA was down 10% in 2002-03 compared with 2001-02. Competition and difficult economic conditions were especially prevalent in the main area of operation, Southern California.

In the distribution business, the Mexican operations experienced a reduction in demand as increased NAFTA tariffs resulted in several multinational customers moving manufacturing operations from Mexico to Asia.  In response, the Mexican operations have increased their focus on Mexican based opportunities.

The distribution business’s largest United States sales regions are Southern California, Northern California and Texas.  The Northern Californian operations continue to experience reduced demand from the technology sector and, as a consequence, have increased their focus on wine and produce opportunities.  Southern California and Texas operations generally experienced flat activity.

Overall, in local currency, sales grew by 4.8% in 2002-03 over the previous year and operating margins remained stable despite intense competitive pressure caused by the severe contraction in business activity. In A$ terms sales were down 8.1% in 2002-03 from A$1,413 million in 2001-02 to A$1,299 million.

In 2002-03 the rookie sales force was increased by 11% over 2001-02 and this is expected to increase the ability to penetrate both new and existing accounts and markets.  Best practices in the areas of procurement and logistics proved effective in defending market share and improving customer service.  Specifically, worldwide purchasing, the development of a hub and satellite logistics network and inventory rationalisation projects yielded positive results.  It is expected that the benefits from these initiatives will become more pronounced when the level of activity rebounds.

There is cautious optimism that the economic outlook will gradually improve during the 2003-04, however any recovery is unlikely to positively impact until the end of calendar 2003.

Competition will continue to be difficult especially for the manufacturing business.  However, it is anticipated that there will be an improvement in profitability and other measures in fiscal year 2003-04.

Amcor Rentsch and Closures

For the combined Amcor Rentsch and Amcor Closures operations, PBITA was up 73% from A$48.6 million in 2001-02 to A$84.1 million in 2002-03 and sales were up 114% for the equivalent period mainly due to the acquisition of Schmalbach’s closures operations.

Amcor Rentsch had a strong year with sales up 15% in 2002-03 to A$549 million (from A$477 million in 2001-02) and profit before interest, tax and goodwill amortisation in 2002-03 also up on the equivalent period last year.

Volumes were particularly strong in Russia with the third printing press installed at Novgorod in November 2002 operating at full capacity.  Amcor is reviewing options to further increase capacity in Russia to meet ongoing customer demand.

Volume growth in Western Europe was assisted by the implementation of the European Union’s directive for new health warnings on cartons.  New designs from customers led to strong sales for product development services.

The business will be starting up a new press in Portugal in late 2003, to meet increased volumes resulting from a new contract in the Southern European market.

In January 2003 Amcor announced the sale of its 65% holding in the North American metal and plastic closure business to its joint venture partner Silgan Holdings, via an existing agreement where Silgan Holdings exercised its right to acquire Amcor’s shareholding.

Subsequent to the 2002-03 year-end, Amcor has also sold its plastic tub businesses for A$36 million. This business did not make a positive contribution to profit for the 2002-03 year.

For the ongoing White Cap Closures operations, volumes in 2002-03 were down 3.6% compared with 2001-02 due to a combination of the impact of deposit legislation in Germany, the weaker economy in Europe and the political uncertainty in Venezuela.  The business continues to focus on ongoing cost cutting initiatives to improve operating productivity.

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Expansion of the plastic closure capacity in Poland is on schedule with production expected to commence by January 2004. A new plant in the Philippines has commenced operations and is supplying innovative proprietary closure technology to a food customer in the Asian region.

The 51% owned plastic closure joint venture with Bericap in North America operates two plants, one in Ontario and a new plant in California, which commenced production in July 2002.  Sales for the 2002-03 year were up 12% on 2001-02, mainly due to the start-up of this new plant.  The weakness in the US$ impacted margins in Canada for those closures exported to the US.

Amcor Asia

Amcor Asia had a difficult year with PBITA in 2002-03 down 21% in local currency terms and In Australian dollar terms down 28% to A$32 million from A$45 million in 2001-02.

After a flat first half of 2002-03, the economies of Asia were severely impacted by the SARS virus and the advent of the war in Iraq. Sales were down 15% from A$310 million in 2001-02 to A$263 million in 2002-03.

The corrugated business, which has exposure to a broad range of industries, faced unstable paper prices and a substantial fall in demand as a result of the SARS virus.  The plant at Dongyuan in Southern China was particularly hard hit by its impact.

The tobacco carton business performed satisfactorily, although the plant in Beijing was severely impacted when distribution in the city almost came to a halt during the SARS epidemic.

The two flexible plants in China continued to improve their operating performance and PBITA in 2002-03 was ahead of 2001-02.

With the region slowly recovering from the disruption caused by the SARS epidemic, it is anticipated that sales and profit results will gradually improve in 2003-04.

Year Ended June 30, 2002 Compared with Year Ended June 30, 2001