AMCR - Earnings call transcript Q2 2019

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Ron Delia

Okay. Good morning. Thanks everyone for joining us. I’m Ron Delia here to present Amcor's first half results for the 2019 financial year. And with me here today is Michael Casamento Amcor’s CFO.

priority all safety Amcor, us as before, our with with will talk do is and safety you top we meetings we at start about As Amcor. at would've heard

injuries. goal one to that’s it We have when safety comes and no

at Through distraction won’t our months performance -- number to We’re this across other passion of focused keeping no their But the when highlight company at six and commitment no of was was employees goal our safe, yet proud this see especially level across injuries. half Amcor to we to compared fiscal and six every are injuries six able recordable each the that first vigilant improvements every XXXX. of and of we're time to the arguably know for injuries to of we we reductions determined around the given performance And continue reach we but higher were at we able not XX% safety of period. month stay the a reduce first in were risk world. we for by the until the months drive

summary a and X, the Slide to first half. of Turning

opened result, on Operating Flexibles to packaging XX% flow than with was full healthcare Our Rigid higher the this globally. first with across And strong we are in we already again And proposition We a of we and Plastics had provided And in we the track reconfirming beverage and Nespresso outlook also extended was last expectations earnings the growth line world in sales our growth options India Unilever. are small. and our with August North strong In against we with It's and and in financial resonating for growth markets and long-term seeking great first value regional half today. for and half, is cash earnings increasingly performance Amcor. customers deliver year new packaging saw to are emerging year. partnership X%. supply a balanced good the growth plant We growth multinational segments with consumers sustainable customers, that around business opportunity our America. with the with the across customers is large customers this half. and was in especially clear which

As progress making And made back come leader to to number a I'll last are the significant we’ve we six the which over industry we dimensions value comes finally, transaction. later. have on Bemis proposition progress real towards it differentiated and when a sustainability of closing months the

this materials, presentation. sheet for on deal of higher X.X EPS of cost performance. leverage times. of overall. sales cash on excited supported working came acquired X.X% the to we're higher in Sales shareholders excluding growth remains in and all for shows performance last line and the recently come businesses, across higher with approximately metrics raw the combination recoveries about that topic restructuring the back X.X% calendar again of growth, the half. benefits was from creates year material our came Slide impact this and And those were businesses for later expect and at by strong year. of capital organic margins strong X with increase excellent close We Amcor the sales our flow raw costs. from were And balance of strong financial the in the I'll company for the X% key And up XXXX and and second opportunities substantial the quarter

our will Bemis acquisition. the even financial with and strengthen We’re following that very comfortable position further

US XX.X Board the in results our dividend and cents per the increased share. outlook for business, these the the confidence to With interim

expectations. in strong on the terms and and segment growth contributions year prior line X, was in higher in with the the X. in performance emerging Flexibles as our These cost Flexibles PBIT PBIT to time in XXXX. to adverse to XXXX outlook was the And operating Earnings the million acquisitions August following in constant XXXX constant material both across segment into lag last than from deliver this higher also financial currency in Now solid we're with Slide has organic growth the recent growth currency financial benefits partly on business. PBIT Moving The Flexibles changed sales offset was healthcare we Flexibles year Group of provided factors. compared markets than from account takes expecting Slide higher modestly not year XXXX. were growth PBIT reflects for the The $XXX raw from impact normal the by costs Outlook And the growth. terms recovering guidance the year. was on In in achieved the

related no movements costs. raw impact organic modest assumes to which in growth, First, material earnings

we So to impact HX. the reverse expect this means in in adverse HX

net final Second, achieve to to of benefits $XX synergies. benefit restructuring and deducting million cost after related And announced in million. initiatives acquisitions approximately prior XXXX from lastly, approximately of June integrate period $XX incremental and

to business and the the favorable year and strong. terms X% were from half, Argentina where costs beverage beverage initiatives in volumes Moving integration currency Plastics from be year. in inclusive will from lower Slide of mix And to was in was restructuring higher and contribution a volumes a to have volumes half demand. a businesses growth on conditions impacted earnings than in There the acquired returned also North lower overall in X.X% XX. benefiting was PBIT mix. adversely American in Latin Rigid benefited which the our the and good start June volume modest year markets from prior product increased than last end America higher economic constant consumer now first growth incurred business In

last volumes Argentina were Excluding year. than X% higher

the provided and we also Rigid a There compared for expect the to $XXX guidance, to deliver growth outlook with Slide Plastics Rigid few the account PBIT factors. solid in in Plastics million on which XXXX change no and of achieved takes XXXX this is terms business to in into August In continue XX. we XXXX our

First, modest organic growth.

benefit of acquisitions from prior achieve to integrate to about and the sheet. $X balance restructuring period initiatives. million costs approximately that, the million flow net hand deducting and to million million $X synergies from cash benefit Michael approximately and $XX after I'll to Second, $XX of talk With it over to

Michael Casamento

morning. Ron. Good Thanks,

the costs in spend included which after reflecting costs in restructuring the underlying of mainly at increase been up and US$XX XXX XX% operating around was the year. prior million flow debt Cash So have cash was PBITDA. for XX USA. is impacts deducting of million higher a period and related strong This integration interest million the on with of

lower the interest debt we year be second costs of to half benefit and this half the high started relative from to fixed rate During some first to expect maturities second the of cost in relatively half.

a a businesses. area the As has working very particular and we're focus benefits being highlight been across all capital Ron realized. of mentioned, was happy This performance to see

to and to last capital initiatives XXXX. million years. announced XX% and a working XXX of be XX.X% flow cash in from XX.X% in in improvements at year The after programs to in free restructuring dividends from including the our average relates and range prior receivables. with sales larger-scale year August, million. were payables reduced areas June ratio from to capital on Spend guidance range to line we expenditure full of And we've XXX expect Our

remains balance Slide at sheet is point key sheet strong. and on debt the that XX Looking balance Amcor's profile, the

this primary we Our is of with balance anticipated maintain objective at grade for in ratios a to times at them To consider cover. wide leverage range being and two we investment the of with main period X.X interest robust These levels X.X an where two rating. remain sheet and achieve the and to credit respectively. at end initiatives times, be are line ones

costs terms currency mentioned interest the the million for the lower net with in cost be in interest first terms constant half we of half earlier. XXXX financing year to of XXX than the financial I second as XXX million In range in to expect

be debt currencies. to fixed of years, very well a balanced We access with an debt with floating diverse and of funding a combination appropriate range position of our comfortable to maturity of mix in to debt sources five a non-current a continue in relation profile and

We place prior million our in combined advanced work into the to both account in refinancings for facility, April a syndicated XXXX. well and to company Bemis of USDXXX are larger ensure transaction Amcor’s sizeable million due the which funding also bond close arrangements takes are EURXXX in next this and

me hand growth. to Amcor is summary, morning's strong well With and over balance in very this key I'll generation the positioned message remains Ron. So back with sheet capacity for from cash that, that

Ron Delia

Thanks, Michael.

provides includes set stakeholders. recap global the and And start see normally leading our do would strategy, on the focused minutes potential company I term of and longer winning next quickly we growth strategy I'll Slide businesses; Starting differentiated these few a I about recap with for company. the all our a Amcor’s a be will as which of For on the XX elements: of aspiration three of our packaging calls portfolio to which capabilities; talk with for and key

The is share which We’ve segments, first important play in element some portfolio. our characteristics. to chosen

us outlook. four packaging, products, a to segments have containers, by an multiple and something And to focus most And focused product rigid we segments: winning and advantage scale all market. Flexible the structure of in consumer today growth industry in paths these fast or specialty closures. moving relative primary criteria good have in leadership for another packaging and offer cartons First led portfolio to on of positions have a unique attractive those

is cash way is for to we changed order and capabilities across the these in we The strong remains our our from organically, businesses creation flow and we drive Slide this we And of in differentiated is And shareholders. capabilities years. good and businesses how a flow, or paying of shareholders, to value generate that And capabilities value depicting second our a been we across a of shareholder Amcor portfolio. instead the deploy essentially over across returning to strategy the it's developing in creation that capital acquisitions packaging of hasn't for cash consistent leverage residual think our the consistent framework, number believe which we’ve XX a the we portfolio get and our we are look way which deploying dividends, how consistent growing time keys cash is called the way differentiated And in industry allocation strong winning them to business defensive. through which has describe about are pursuing our it way, win model how Amcor. element

an XX on and our agenda extensive. sustainability Slide quite to is Turning update which

ago, becoming food packaging develop pollution increasing the we’re became to pledge the this and resources, an plastics our and A those one been And introduced on from far the opportunities focused achieve puts so engineering the others in world recycle on report in packaging; we of And interest R&D biggest year be a the of and deal by we a also and on packaging in innovation protecting to the commitment and to global a needs more the manner. to and some and and product technical consumer for which for recyclable. with the Amcor with in our last advance existing is drive a of we use increase going flexible Genesis of staffing in sustainability comes materials way. around economy in general especially plan been meet environmentally-friendly One to scale to world. shared establish functional and based always environmentally-friendly joining allocate doubling of first sustainability higher create this excellence XXXX, our to to of postconsumer our recently or are see our greater XXX a progress delivering months. differentiated have to development, packaging we and sustainable to will new there all We’ve convenient products of consumer several and on reusable commitment with efforts definitions packaging lab over and And And packaging. with has more further And and role our Amcor products to to last products in center potential and called lockstep recycled significantly a by and of And around we believe took results films recyclable innovation the packing content. targets packaging with a our company months recycling we've other over step great October healthcare those global governments levels great with forward opportunity new levels critical in companies and a primary capabilities higher annually. fully HeatFlex signatory coming in XX around adding promising couple trialing and efforts of customers and dedicated building. even and Europe decided resources months to flexible momentum us waste work has

investments in wide curbside to demand packaging for to And front. community assets. product fast-track And step co-invest Bemis quickly which is The and as meaningful and customers of opportunities unique sustainability packaging some opportunity continue into we in we exciting industry public we R&D supporting working looking for recap, forward, in growth us recycling on innovations, infrastructure. as update through provide towards partnering recycling contributing going trials and we industry quick fully we are sustainable dedicated very It's combined strategic our the in now together development cases, expect journey. can are significant leader, partnerships in combining our You the to flexible to the on most leaders the range take a industry, transaction. our and standards ever, to I'll flexible scale recyclable packaging with global will for a innovations proposition sustainable we programs another all-stock at recyclability, be stakeholders to greater to to this these the packaging we a to for in indicates results and the than in announced and greater the that brings and But for our see with the commercialization of our believe most time combining forward To highly believe by transaction have perspective, journey a strong a and been two at drive will the will have we a big compelling and they from and for deliver and employees, a customers player value the would very a and agree. region by in The its that in said XXXX, leader time together Bemis, today a Putting consumer scale, talent time and being capability in is two never we moment companies August the Amcor own greater. in of is compelling the From resources the world. footprint company footprint, when packaging and offer for advantages right. step each comprehensive and most around combination take toward leading leading company key have a the feedback opportunities environment. with company active

this around our and for benefit to across and and and equally team going cost liquidity is be The increased that shareholders. deliver there's the itself metrics. as manufacturing the across compelling which term for above will create metrics, structure, cost And can business colleagues Amcor's average closer a an pro above over accretion course expected tax-free have and and the greater million with available well revenue acquisition in across post And over double-digit represent footprint three-year strong general delivering Bemis in from outperform to develop The segments, continue focused exposure has world. end just delivered and synergies global and any and record from work Bemis additional that and and profile relatively would target. markets drive closer to normal $XXX significant see these we administration organic one capabilities near synergies forward, a unlocking to synergy industry's portfolio stronger leveraged to the growth. delivering earnings weighted opportunities aspire customers financial attractive returns to that. to close. the to opportunity transferred be opportunities And will to is transaction do period investors by for And had not further of cost Our Amcor get the are and synergies forma capital either best on procurement. independently. which to be synergies companies of will product merge evenly growth will great of upside would been teams cash regions costs, the footprint rationale all-stock to real we and for company we and financial and EPS track both talents together the the Amcor The that Amcor from transaction

stronger going billion forward. own annually in of rates higher with proposition, over and flow synergies financial maintain potential competitive with cost a investment the complementary delivery free generating given XX, profile an segments. at exposure will business higher sheet a $X interest Moving strengthened billion is capabilities And a continue increase Amcor's cash EBITDA the $X.X dividend and exceeding well-positioned margins increased and to time. very grow pay customer attractive the annual of balance will Shareholders Amcor and differentiated value will through to which Slide grade to an to compelling

sheet immediate of the Importantly, structure outcome or will results listed stock being there and balance terms be in share advantaged transaction for a exchanges, creates unique The which participation. buybacks. further on index in two capacity investment major

will XX% weighting. own the and will Amcor's shareholder account shareholders index investment geographic mandates included our Index of Australian in Amcor’s with to the no into the change expected that XXX of and continue combined the base, mix S&P to taking listed the shares significant be company Given current

contribute the and also of XXX start this team would execution result including structure tax-free. a in and be shareholders the the several and up and company benefits world. both in leading up XX largest planning will of efforts share and significant made about combined been plans total progressing antitrust by drive post the announced, of securing staffed synergy cash the to with an XXX And which Brazil the including with to jurisdictions period. for the management has exchange well setting completed would these will to the to be qualify line the synergy office IMO S&P And was And process market at Europe, is regulatory the all and from are close advanced closing share the consents exception underway. Since joint that of been the towards we expect clearances development is of to full-time Bemis transaction without stage. external need Clearance close conditional an detailed all-stock company within enable a top oversee for of has mean combined and advisors Amcor for transaction required index discussions with the This fast the expectations. of supported or secured integration, the the integration Index. inclusion the well each in regions as transaction in has to and of We is cap and delivery designed which closure, progress in any to the US in been integration in US closure the are members

fact, be In by days. we expect coming a Commission decision European to the the announced in

to look new deal year. second strong to Bemis customers. continue and building a a quarter financial closing, good XXXX the In and year we with the of the the together will forward our future anticipate had XXXX start we calendar colleagues We in to close

are outlook. year line against with we in was to performance and full track an financial unchanged expectations on Our deliver

a and which substantial. about winning we that, customers I'm up all in to happy our also of ahead believe every day made Amcor of for acquisition, With remains agenda take significant towards We potential we’ve future. the progress with we Bemis excited sustainability very questions. and the We're the us promising see advancing sets opportunities closing growth are

Niraj Shah

Stanley. you across Hi seeing from an harder maybe cost in update Ron, key Neeraj Morgan are Shah input to us price here categories, liquids give us track? which on Could for you're trends particular

Ron Delia

most raw first half, million to PBIT continue segment relevant for the had Yes. impact. about Flexible our Thanks, headwind Packaging in we adverse a which so Niraj. front, is see The modest a we material $X

nil. regions second, see in quarter, statement expected negative impact resins first which off first the in in costs, the of obviously quite that the towards an in and full November, would had polymers flatter started late was currencies. were well, about impact will materials year saw which translate are out off decline for some come oil US typically we December material in the the currency to inverse benefits of raw in end your trends, reversed so will sort you as substantially. cases point some second the income the to the local and also the neutralizes we that But you be though so back ‘XX calendar question movement as be recorded million $X in quarter, did come Now the dollars half I and in

impact. the forward, for in say Looking would not statement be ticking always indexes change our us again mid-single-digit that income is David? signs for enough to difficult liquids outlook are to the see we up commodities, but no many the it’s year, across different, which no

David Toth

second big a Ron, Slide slide, of part your to X% through are probably to harder, first that well two markets. you I million you working, for the Is detail that you XX. probably part question a top-down titles? you Michael. a well, can earnings think which that’s going questions, customers in $XX was of I lagging? from I which driving contribution is bit pretty still as said uplift big question, on to Can rebates. that is areas to emerging that that contribution Can a on too the of is It that And driving close? was as statement. This ask going are areas mean growth the is go

Ron Delia

Yes.

standout emerging the Latin point, that in obviously, the start Eastern excellent David of sales emerging growth had be I pointed Europe, rate Asia, had Europe also growth, of has but in regions, growth good say good profit we well. was sales America, would three so Asia, general. you EBIT in proper little had Eastern those in as all Latin had the cost would was in question. out. starting a bit We with markets all me X% growth similarly them, and lower. growth Asia growth Let grew And regions America markets the as big performance we That each of in them. we are of

we that America, individual containers spans across a Latin rigid nine have you business both XX and starts in across or growth some and But always had markets. cartons countries, Now specialty generally different have business. different in Flexibles, fits we

really that pretty much probably So it Asian was across the business board. I highlight. say was would the

Unidentified Analyst

[Inaudible]

Ron Delia

in well. markets materials referred Yes, extensively raw as those as had of Niraj’s currency but I question, to you answer look off depreciate to in quite some the you come had

emerging seen we may see have necessarily to the year. elsewhere. We don't the we the at the leads end the markets lower in second forward. Look So see quarter see raws from anything of that didn't benefit outlook our we'll that going for change

Michael Casamento

actually Included that. referring On that net for line the we thanks rebates XX, is settlement, that out claim Slide settlement perspective. net to in point, back which from then so you’re in [SI] the an legal including line the --

a and So key that that’s settlement movement had. in that line relates we really the that to legal

increased increase about an line, excluding usually costs net So have the of that below that perspective, the back million. we and But offsetting that integration the XX million XX in about got XX restructuring saw then year the from in prior other we income during other versus in so out the income period total one-off. you XX and obviously

I those think of a net the was million. two minor of about So gain $X

Unidentified Analyst

substrates we strong cash are weaker first exactly for if look drivers cash look period, secondly the side? would key your think you’re you just of then what's just performance packaging can do of expect positioned at just sort are there? half other think So just where performance, And of currently you with on flow on in a generally any Ron, there to of competitors you just key more flow the there through drivers looking at the at relative side? run that Rigid at we than sustainability, not key and Plastics, sort the very of And Flexibles broadly that? where customers and just sort

Ron Delia

the one first take flow we we I me steam on it is just it’s full a gaining weight. are question. Let the leaning into Amcor just our back be momentum -- but understated. that great come cash can't and with Look opportunity mean externally can sustainability inside then it’s and

point much In And not it's terms at the revolve is discussion. anywhere primary around place a starting that as point of discussion is we’re the or Amcor and where there me it of topic our for least customers, doesn't positioned senior-level at taken spirit partnership. have of in this a customer that's very of

solutions, Our our customers as be where likely couldn't able at. realize those being the help we So more to looking they in from to are customers prominence I able we eyes that positioning right? for society of them, is that in that for know better And the have answers. also and consumers are a Amcor have say to expense terms of

and you process much things earlier, and the as this We and is to are to excellent eager development myself I and amuse the is faster are had work an position. qualification the willing open commercialize and there. seen to alluded more predominant for And to consumer through in to numbers need I've being seeing get discussion. demand products customers market product because

see argue recognizes If to is So the United would answers customers. the positioned broadly, that years. units and we has and they our the sphere still many that plastics of our and better in consumer anybody and the company a that are fully take container, taking are such well actually challenge about I think still and immediate and are glass, still we more which year container. positioned beyond last characteristics receivability they all technology units convenience we and I we as plastic been see a used seeing from the has But States, versus recyclable technical perspective, than share many, I is that the the are recyclability help light metal plastic consumer of weight. part the capability to packaging share enjoy plastic a in And continuing other for and see that think it's go the within to and we growth other sphere recycle we getting beverage the product formats. by In from trend the because the think is

we relative we think relative that our to we we substitutes containers suggest whole we and and flexible immediate well-placed make space and that out might the packaging peers So is more taking, highlighted be that plastic actions about are these topic. that there flow the well-positioned. which would packaging would we really to and recyclability, cash can product specific there I partnerships this mean new the is question? follow-up a developments are state I The talk on we if on morning

Michael Casamento

terms ratio of was had cash the pleasing we in working really we improvements. in it capital I have got results so our to sustained -- period over sales flow look Yes mean the and

scenario some in the area So of last seen increase that acquisitions. in with over on. years have have focused Obviously couple we we been that the

side we is now on sustainable dues continue that we and some benefits the was which And as also the payables across there. our some some improvement area hope in to saw we certainly benefit board and we and period got on the see improvement through progress managing over that we’d since focus are this forwards. we’ve receivable flow it see there the can further -- We some to over in starting really in

Unidentified Analyst

business, in you in Flexibles through talk can We but the and business. in the improvement strong performance the am and in and first talk us us Plastics through half forward mix mix the if volume the you can Ron. Flexibles expectations division? wondering just if a your saw volume Thanks, of performance I the going Rigid

Ron Delia

say to guide half, in will with consistent continue first I'd in the modest going forward performance growth so the be While the we performance both to organic segments.

meals first ready it some I the to as us major about being growth in relates in had mix pharmaceutical in We made of in segments. they Specifically weakness one, mix contribution culinary healthcare just emerging was which the very is major, mix of the packaging. not value-added These packaging Flexibles in and both but categories, higher first applications. we the the negative. half, the the some are food referenced where in as categories, good and mentioned, came Healthcare for in had medical particularly half segments, Europe that good growth in in is markets, we

Unidentified Analyst

Alusa’s in question you that that second or performed some the break me of half? the terms a give color performance, terms Just out in can from of how in

Ron Delia

particularly before way Look the it much the it year. expected the over business the same raw depreciation is that which right they’ve months materials. headwind. It's an decline last the that certainly the with comment headwinds Argentina, offsetting in currency it's track not that performed business. had that It we raw mixed I America, certainly have on XX, and the saying in this underlying was has doesn't all I improved generally about XX bag. material and business The in wouldn't we’re say that generally depressed. wearing South But exposure market in a has happy to

on in particular in North America big and America business and multinational had South Asia, from ability that's also Europe in some region benefits supply the but not win in extent. and in to us, We to customers that just in for continue to

with So the we’re Might one here. phone that’s at. from happy where take

JP Brook have from Campbell-Crawford Morgan. We

Brook Campbell-Crawford

was some you believe this relating quantify recent I half incurred for is in Firstly first acquisition. half just what cost expectation where Generally there region and to 'XX? the half in synergies the also the and second first achieve to the in help cost would on what

Ron Delia

of there. provide went to in order that's Michael on generally and slide we've cost magnitude through integration, Yes, we on that XX synergies deals which million numbers of half before, achieve that’ll Michael on the $XX can first would But around the Rigid within the the back is expect but of the it's a more bolt-on the Plastics, that in started bit that done it half particularly second experience, Page recently.

Brook Campbell-Crawford

business And Bemis going just after particularly then short America. a on in talks about lot North also run

And what time if in this more so, sort of during Europe investments to thought to the interested be of similar or Just if globe? today you made elsewhere it? for drive opportunity Amcor across need

Ron Delia

a smaller doing in also and we’re market, our rate. of which shorter they And the Flexibles lot customer are that's is proliferating doing. segments the into tap a business trend that the products SKUs In Yes, all part we're same larger run that's a then in launching requirement. the a rapid at work customers of Bemis pervasive look, new of absolutely, things, that's is the who for

we’ve business know it's have of is incremental you'd business None respond asset a this from are an quicker. From digital dollars, productive some capital run material to some got the really just made changes million printing several these some a and that process short able be in not We big to asset cost. perspective, we've printing presses assets. Europe,

forward the asset So asset and machines towards as geared that go are part the that of investments the refresh roll market. towards base, we increasingly

The side. to the release we regional in beverage side continues the really, strong of see the alluded today I to the Plastics think market. growth business that's really Rigid in Flexibles

customers think continue in earlier of format winning the preferences. to product we market quite winning We're So one plastic about with them, is part or the had smaller grow the one well. that maybe to category I question US are participating them with

And see so, we going expect to to continue. that forward

Brook Campbell-Crawford

Ron. Thanks,

from comment wanted Just just countries. team talking revisit films allying for I shipped to of one acquisition, me. to sort by between barrier the higher last a the more year made about be just

which manufactures if countries you wondering is area? barrier Amcor benefit currently higher and if highlight these this Just the and in any could films from synergies included Bemis

Ron Delia

are is source or in potential Yes. It’s Brazil. today us unique benefits large generally, of part leader any world seen no leader of we’ve our footprint included North first the revenue is Look complementary, quoted a acquisition in the as upside. that other with in players in the Look the think so and and previously, that Bemis' would We synergy case regions quite America good films. -- be high technology footprints both barrier in are products, easiest metrics the the question. there that's I of our they’re

lot pretty are but films of for as do packaging higher also a we foil-based We well. well-regarded

say take that America, Bemis to Bemis North winning Europe rest opportunity to let's be North films and in the for higher to the of the take have us the have, in products and America opportunities similarly and and America Latin that might those Europe And Asia, we doesn't maybe so that is the from to barrier take Brazil. those Europe to

is is both So potential it'll opportunity that it's deal but of go ways, really swap, included I a key none in the metrics. think the that

John Purtell

Purtell had from Macquarie, Hi, a just John couple of questions.

mean last Just sense, is starting months of in rise that the a sort of faced of think you’ve in I general I for this particular like XX about feels and that the are any Are giving at sort headwinds of tailwinds any business, the focus talking the headwinds to sort of base additional particular there moment? a -- abate. there sort we're are or you

Ron Delia

XX I themselves I right? think have the think materials. that to I some about to enough volumes, -- look increases about talked the started talked manifested mean it issues, material period. whether industry say kind industry I were There immune I No, think they’ve weren't issues, of in issues or of those raw we was we month abate. that raw we would

at expect say more we get I million saw haven't space, the to growth. not In the stage. off In that We dollar volume impact this real seen in but fact. leveling $X half back the yet, return a would beverage had we to and we look is first turn a adverse

the of some generate market to demonstrated has with think earlier. I the gotten particularly more it has inventory that much cycling last customers growth all not robust, referred but sure can the was smaller that generally I that I'm year, business destocking I think

and to I about was once nothing continues the a half. and a once and last and the half for can few of think pretty second while outlook aware you you’re we’re have we on where hitting control good John, year we resilient So focused we horizon defensive at the on but things period what had it the and a business industry in there the just like be feel pretty the

John Purtell

to terms sort other constant did just were direction? sort terms percent, rigid an in currency, that Just add-on EBIT of mentioned on, Latin that, of volumes so what positive you’ve up in in American move of of comment about

Ron Delia

grew cost earnings so performance, and business It and positive. benefited from It from growth benefited Yes. the I ex-Argentina the think and was of X% was volume good that. mix from modestly benefited that,

David Walker

any Clime recyclable from it Capital. which make summary synergies to metrics Walker David cost packaging? more the supply previous acquisitions, back for revenue to and you Hanging give can achieved will and were us

Ron Delia

of all metrics. return where I Look number the have big synergies think best Alusa our describe we’ve one synergies come we would factor that example up don’t picked the I the first the revenue qualitatively, into of a is revenue --

with not in two I’m America very able and of see America, really to healthcare Once extended we a And our best back very In and sure is that and to aspirations legacy but deal global for We've agreements Americas. that that to opened about of And wouldn't but we we’ve be packaging either focused benefits that Alusa without partner. So two the it that broader the so large to discussions a prior closed to I say you on we those business. those to Asia but terms that in events greenfield those the of in sure business the range customers on certainly in it. example, player pin we acquisition, happened that deal a some that of weren’t are have we Alusa things I’m act but much the Alusa where well think put developments announced place I not global the benefits was Europe supply in eyes a we’ve opened supply plan that India compelling flexible splendored whole Nespresso, Latin more view of a indirectly. provide all there in deal South up talked usual Unilever. region. today, that in And we suspects with our the think were the partnership would received specifically in reinforced do I customers I in of are and

occurring. expect the are quantify in we of that forward I don't as of benefits well. because a with give anyway, I ourselves it transaction that’s don’t know that So lot thing credit going to think but we kind the for we that the metrics Bemis that see

question? second your sorry And

Unidentified Analyst

[Indiscernible]

Ron Delia

solution capacity to scale the reason expensive chain. resin chain time. tends it's or it pellet, but moment should no I lack will be different. of There's security that and supply function value -- content more that's technical the held the lack which would than the that’s think but economics processes input processing in partially not of the out world end or demand has over that's production be there and of just the should virgin at why accrue Look, more what of cost the At back day cost scale the processing supply the supply more a recycled the the through going consumer to a recycled cost benefits the of it's

Richard Johnson

think where but they Richard Johnson an that’s opportunity through are the CLSA. companies one can. of find you’ve these regions seeing recyclability is the to got that. easy, addressed; so out the elements Ron from one addressing, clearly say which when continue But that very two still, the I two, plastics, sort I’ve you going about just they way to give with CPG

products plastics. or I from So away moved being product, every away company I almost is moved announcing a day being you mean was just see their which a in wondering, fact

or what might extent have looking be portfolio to that done to process? So risk you your much that work how

Ron Delia

expansive. Yes, on it’s I good the a mean all front are first question. of our development efforts product

and our and every our compostability solutions likely category the exploring are customers fact range bio-based Amcor in would format. almost best biodegradability, think customers materials we Amcor recyclability and outcome like for every including or and our alike. full is So customers say a But and of

to fiber-based from laminates. them of time-to-time We also about talk some more

is easily you are be I And products as these some be if not going of addressed to reality I the particularly think that mean preserved, I alternative. to categories generally barrier Richard we have understand are in demand, the the an think to functionality the may requirements now high-profile by know think the they supplying But served most best examples too. that they by plastics cases. some that, I very customers are I speaking, into think that point would see

Richard Johnson

lot they’ve make know business of as well? now. some as for wrap which beverage comments Bemis are got large the a we I of Because a Do fiber-based

Ron Delia

say for is particularly I much and business. overwrap term, the you films if liquids an they that’s areas cost. near anything of in got see to high-performance very and structures Bemis proteins substitutes meat to Europe. our are business would like have core the high Those Yes, close difficult it's in which some very value-add attractive think where about

Richard Johnson

just couple please? Mike in if And you for I of the just through Can may. D&A a drop run me

Michael Casamento

sure. Yes,

I that of think the drop overall, the half drop currency. is actually

the we on have some components back cash and the million, and of have So the of programs really restructuring about net been while. move last was non-cash that's to that. over X dove the There sort

So part of that is D&A. a reduction in

Richard Johnson

of is in trying understand, be X How I just currency, of would about to X much is the D&A million understand? of to was that XX roughly? sort which kind hard

Michael Casamento

XX. The D&A movement is in

Richard Johnson

constant And currency basis? on the then movement

Michael Casamento

Richard Johnson

or currency, so impact X of half was X, impact total currency XX. net so currency Yes, your is that

there is…? understand am why So to trying I

Michael Casamento

In higher. PBITDA it’s

Richard Johnson

switch give helpful, your rebates, just just large those just run two is through I categories, a that’s sales, the I’ll to back we'll divisions look so me can offset? If restructuring you Slide there. feel down not at come can your Okay. the the asset And other which for then I and years, XX, costs. incredibly on that, which

Michael Casamento

It’s across mix a the mean… I board. Yes,

Richard Johnson

Flexibles, So that’s sales that in sustainably asset all right? is

Michael Casamento

be some rigid. in There will

Richard Johnson

US under not be? asset on think report and GAAP, next when going be they’re just what numbers to [civil] those would slide, And finally they then you from I are about if how sales your will

Ron Delia

Say that again?

Richard Johnson

those asset under book you US sales could GAAP? So

Michael Casamento

US conversion say the forward way basis basis there of restating of what any we forward on history in we a a differences a GAAP. puts there the seeing through mean are to is to on the where our and we GAAP, takes and working material in I GAAP to go aren’t business can the differences are go IFRS I that underlying but earnings are obviously Look US is impact number US from

Richard Johnson

or from number? confirm Does Alusa these that the or rebate So have rebate what's the gross a that retained number, then gross net addressed, from I gross on you out? you is you’ve what's the that include partly have the number just settling that got monies a And that’s number? can which settlement net

Michael Casamento

net XX.X is sale that The component million. of

Richard Johnson

place? the paid includes out … you that that you had you funds amount previously some the in retained You And first hadn’t said

Ron Delia

and confidential not the are the of the net number party. disclosing it's because with a Alusa gross private settlement other things, just settlement we matter, of Yes,

Richard Johnson

And beverages, then please? feel you growth the for in of a just the North you give exited that finally rate on just Rigid half can and me run American Plastics goals

Ron Delia

did in in second year growth this but second I'm primarily quarter, Yes. the had America because the has had first have that's the quarter to. we we referring sure quarter in quarter, slowed beverage we that The and than in less -- the North is growth last first and for

destocking rapid customers. The had our first we major year quarter a one particularly pronounced last with of and really

from so or destocking. market decline rate of and the indicative growth the was rate benefited And the rate the year last cycling growth year not that this

think I why which is modest the is normalized from for our on you outlook say second changed. had growth, the which perspective quarter could was guess exit rate, more the year inventory I we run hasn’t

in growth We volume for of for year that year. modest remainder expect organic the the business

Scott Ryall

years -- do Rimor Could and your simpler just in can hoping Equity those just was in forward intellectual just goes the Ryall looking of that and you but to you I patents down? Scott having an property from products sorts that sure therefore in going various recycled protected Research. on things how make to you. angles at Thank read trends the know materially you perspective and about contents that the well. XX the touch as you’re from of recycle X sustainability terms I

Ron Delia

that’s yes, … Oh

Scott Ryall

you guess of I that, you that could sort within And well? making as co-investments talk to just are

Ron Delia

sort another week to in of called one would barriers including the for a good Yes, develop the the precisely to and case we've got life which foil, layer harder substitute got multi-layers ease question. format necessarily which allows a and have that both here we been recyclable. provide the where really feel. HeatFlex, of cooked it's really to including the material so high retort is quite pleasing aesthetically in in announced the say. based we've is the with product We've taken at metal. And a example packaging shelf cook one I be for package last a of technical technology makes film products fully to to provide a graphics, are laminate expect to provide and the material recyclable fact time, that quite of be -- provided which substitute this last quite think look the I all a package, to intellectual takes mentioned period those actually in by two because it's important in is does in for that packaging made material things the in which and simpler, today ability similar temperatures, one that it layers, challenge provides very traditional the things preserve that down not it's Genesis, in That it a announced you that it consumer property demand, products you bit for of so to qualities provide of then where couple allows come consumer, mean need to multiple it's do all again formulation, the one is of all to those laminates inside of get has it intensive called illustrations long is IP opening, product cases the is and product substantial are material, multi-materials which single the months more the to demanding polyethylene many I of I would previously good going a same

those So intense. science mix the might “simpler” while the a the is in development more bit is in technology the technology and extensive the material be of requirement there quite products quite actually

we an a like particularly benefits While good supply done the in the the the at it's from have just and investments we've new years, any where for high the us we partnership. to these that opportunity co-investments in to over us, for very a to and -- and that it's a innovations them that get look a opportunity best ensure place volume help of de-risk event cement customer it's way capacity the an co-invest and for there's win-win, to

Scott Ryall

[feedstock], way mentioned the one Does effective that of …? that's include the as you've cost

Ron Delia

refer say investing different our to the potential Yes, the contributing partnerships we or among converting to, assets, world parts are others. co-investing co-investments you -- that there're other so could are in and the in of I more also are recycling co-investments but customers in

along for couple a and Amcor including of recycling in are customers partnerships plastics US So rigid we some but with number as could have our partnerships both packaging of co-investment and NGOs of governments then contributing as characterize others for also those that the a you well. and flexible to curbside a and

We the have on line. a question Larry from Gandler

Larry Gandler

Hi behind can recycling, scope that. talk my questions one of some joint remaining, two color on wondering Ron, if the it like about you kind. it a was most some I sounds that of curbside and put venture of was it's but asked

Ron Delia

partnership, in for brand is it's some Amcor on converters, United referring focused There's which it's to. owners years has now. which One together but cities fund primarily States the recycling Amcor recycling five brings and alike been the not or two to around Larry nonprofit, just rigids that pilot -- four essentially it's focused, we're infrastructure

other and same it's curbside recyclables. the flexible of the of organization to other -- Flexibles basically products recycling a for is curbside -- MRFF other recycling invest recycling optical the is trialing packaging streams The helping it's enable at and flexible around one through as acronym sorting the recycling in as and Murph’s

Larry Gandler

you so Euro And some exchange-rates, it was driving tobacco, sales? is are products had new those looks like of on in I it was and my cartons question what's driving wondering and that, sales USD specialty growth non-tobacco that both other

Ron Delia

is as regions. products others in Asia up things have it burn some the performed customers more our the also of some that well Asia alternative products, of in mix not Larry, picked Those as Morris business couple Phillip the Europe. Eastern of and heat introduced, pretty but well are towards so Yes, we’ve and in the in

Larry Gandler

maybe I meant non-tobacco, And toothpaste I also really meant non-tobacco like what or? by maybe

Ron Delia

driver that Yes been a increase, a have there's material wouldn't a that. that but modest increase there's the of of from bit little

Larry Gandler

Thanks.

Ron Delia

Okay, from are thanks couple Larry. more phone a Goldman. here, of the Birrell on There Owen

Owen Birrell

on margin but we wondering the sort progress and I initiatives one quick performance, that a you contracting. benefits noted that know that the spots delivered just that in Ron, of of Thanks backwards And talked can you've that to I'm within good terms of where on beverages, and PBIT rigids I business what those? are only trouble somewhere are around pulling million the rectifying be is increase, done think X just about

Ron Delia

when And which by excluding impact average run the per that at X,XXX. look movement is how business, business, up which quite the per margins the that of detriment Actually we a bit with distorted then on inflates margin performance sales to X,XXX expansion that XX the of raw expanded the the went basis we're revenue quite gets and we pleased margin, margin pretty substantially the points. a basis, the materials in percentage the percentage margin see line you good

is more grow the hot-fill container sales that and that with beverage the with which pleased of space pretty continued we’re as business good well. then, So where business end is to improved value-added especially mix

So we’re right. that with happy pretty business

Owen Birrell

you And what and forward of activity XX around that? going payback I on million we’re on terms just your the on investment spend back in within sense in sort of period noticed restructuring investment that rigid, are is a what that opportunity seeing

Ron Delia

is it’s payback half. and we the the so and expect will X to about accounts million XX years full invest initiatives in million we second in the accelerate that work a half, see just the is see million the a it’s the XX%, about in a start million number, overhead that’s We to over for that footprint you'll number two and XX year of we’re cash to return The Yes. of accounting going is bit the first the had pick to in modest second as combination benefit reductions half. up XX

Owen Birrell

XX% the second from working performance very And Michael pcp. capital, good just a the question the you, on XX.X% in for

a wondering of kind those level just structural back do any to out of years or reason is bottomed level why three working be could Over get about decade I’m the last there say it’s back, X.X% you optimal what capital?

Michael Casamento

for we years were Alusa running several You in range and kind were a We acquisition X% did to working X.X% much which higher and the are sizable acquisition a then tracking that right. couple Sonoco capital. of

increase So that's why have over you of seen the the years. couple last

we Now come and are pretty down of starting are it. on the working to to get focused certainly starting that top as capital being we on

to be get way on that working got expect that over clearly back hard should you’ve time we right I to down time. That think X% space. through to we’re and So able takes really

Ron Delia

Bemis we forward the with before will as transaction go backwards go We well.

have more on Grant from we Morningstar. have two So we the Slade phone,

Grant Slade

guess in imply the Asian volumes, into Just growth me, obviously and were negative. perhaps would in volumes you noted flat strong Europe I which then one Americas that from Flexible

Just wondered volume if so struggling to is you speak developed flexible much why could in market? Thanks.

Ron Delia

to also number Europe. like talked yogurt the volumes in of that good a We food flat, softness in earlier. healthcare America the Yes, that meals and we earlier. good had categories and referred or we in look growth I markets North I We growth space really had and about but the the were mix in developed more had things some think other less ready

we of we you and X% think up but any there’s about be of healthcare at out are six share mirrors winning in aside, these sharing picking the what the but also personal to business care, really food the the growth out nothing see, our and in so period, market, market typically I last business, same growth and see would given that that nets particularly months. ordinary typically that's So low and time, food, X% in growth or single-digit

Partners. Chau, Keith from more Evans have and we Okay

Keith Chau

circle Good back want around question afternoon the just to on input I Ron, cost.

$X headwind the 'XX I was FY last $XX of year think million. 'XX in last June, I the think first million and of half in

speaking to be loss. should if theoretically even able So input the elevated Amcor entire cover costs

in only the expectation second million half the going reversal. Now $X is

the is to is, be four and One And the XH $XX the questions. it of the of some headwind and couple over Looking a FY'XX should thought where at the months, that the to secondly, what just incurred maybe than three tailwind timing? So that headwind? expect call tracks that actually the input if entire million in past case Amcor does greater recover that is 'XX? costs was still

Ron Delia

Yes. all It’s is the million back. I answer the we good mean will question, $XX short a get

that see saw And costs the for of raw by a $X of the months million driven commodities November four We number raw materials space. entirely resin indices planned this the the forward a the decline things a X%, mixed X% assumes movements of see of in back polymer-based flat and and we relatively going is and we supply months materials in our year. We the inventory December. including If portfolio and number across bag. generally second in first chain. that's back dependent guidance on slope comes the Our saw polyethylene changes announced we price our half. six X%, what up between outages the is in input It and look through

the So passes is all down. to the changes through business starting forecast, it’s the of difficult but that point up and

So beyond commodity don't if of industries. the half release get back get remainder the we we from $XX the the second will million

Keith Chau

if that single-digits cost quite Is is the correct? is on be decline and after I may costs mid that’s being key base a outlook low Ron -- then And I'm quite what aluminum. a including is up resin assuming in for that the steep

Ron Delia

the didn’t Sorry steep I -- hear -- was steep you said question? after what the

Keith Chau

and what increase is Yes, in cost, levels was the being both that how talking for you are resin? off given your so mid I'm that is input about the steep input costs of you aluminum assuming troughs single-digits fall when a

Ron Delia

from Yes, we current the published look across in forward time off the -- point indices. different of forward current

of increases end the from single-digit mid see You first half.

Ron Delia

the I will think call. no if further Thank you. are there close questions, we

Amcor (AMCR) 12 Feb 192019 Q2 Earnings call transcript