AMCR - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Amcor Half Year 2020 Results Conference Call [Operator Instructions]. I would now like to hand the conference over to your speaker today, Tracey Whitehead, Head of Investor Relations. Please go ahead.

Tracey Whitehead

Thank you. And welcome to Amcor's First Half Earnings Call. of the those morning and to Australia. in evening you U.S., in good Good

the is call Executive on me Joining today Michael Chief Officer Ron Casamento, Financial Officer. and Chief Delia,

Web I'll you section, time, you'll press be which our and find under call discussed this At on where to our of release the the found site, direct Investors presentation will release amcor.com today. We'll measures as Web against presentation information. Reconciliations performance in our we combined be can press about financial these talk non-GAAP site. measures discuss and also on the non-GAAP comparative

predicted that our regarding Actual due during uncertainties. review subject statement of variety you including remind I’ll refer to company forward-looking these to certain factors. the to performance results made may Also Amcor's a call and results are SEC Please statements filings, or factors. on future differ and of to XX-K from risks Form this expected historical,

turn Ron. I'll it to that, With over

Ron Delia

first to thanks, And Tracey. Thanks, financial Amcor's everyone, for joining us the XXXX year. discuss half for results

mentioned, Tracey for Financial is some Michael with begin and here with prepared today Chief remarks we'll And open brief the Officer. Q&A. then Casamento, line Amcor's me As

Everything Let's begin well. safety in X with presentation do where the with start Amcor at these starts and pack. is Slide safety as so we we calls

we from and numbers have Amcor related businesses acquired with to And was hours’ half past work. Bemis. some rate now, it's period our experience this different that million and of believe XXX case higher rates continue there possible has more. know of per that our But been And that during role yet. the no man see with no our For injuries, for six overall frequency we X.X. business time is free of months over to was for not injuries X.X and sites typically The we're we or injury recordable evidence

where our of providing across Amcor's the aligning the primary made year all practices throughout injuries. on towards the we the progress reduction we all building drive a So we to eliminating safety remains in look across sites, X% year focus six and forward updates on had this in months the We on our as company. first injuries

Moving key on today Slide have to messages we the five for X.

had First, flow. delivering earnings with we've the first cash good growth solid a half business strong and

Second, taking a currency for year. the the constant half expectations year organic synergies, the faster of into the improved X% account has delivery good first range for growth rest XX% of growth outlook and to our to of performance, for EPS

is as our leverage but opportunities of result earnings in of by as well, integration terms customer which the delivered a the been of proposition, value to only improved well business progressing as relation not has synergies we combination. see the organic Bemis Third, also business, the in growth the to

conditions. the to consistent consumer action generating positioned multiple continuing sustainability. market of on And then defensive uniquely leave fronts. well committed to shareholders, way positions we're macroeconomic positioned, on regardless to our for our Fourth, exposure We're fully and very returns continue lead and us segments taking finally,

synergies through is generally of and first and we volume to Sales packaging the earnings the significant amount a faster and businesses there input excluding larger to in impact summary lower in our where we returned expected. revenue had costs. America, Volumes X.X% quarter. terms in the of a North on sales first no grew provides cash Rigid pass impact negative down related in flexible results delivered Sales strong And overall in Europe with modestly packaging. constant currency X initially at Slide growth, half shareholders. of we we saw what were than pace a consistent

sales cartons. especially America, and were in lower However, Flexibles Latin

growth, the organic benefits would Flexibles on the terms X.X% highlighted Packaging be EBIT constant mid Rigid we up were segment, call. as the in with X% in single-digit $XX growth million. of segment case synergy was driven plus first in lower our approximately Earnings currency earnings EBIT by quarter

EPS a dividend dividends share. flow returned per million repurchases the was $X.XXX declared increased strong and quarterly in half. currency Free to through cash constant dividends Board of than terms, by the and we during shareholders and more share $XXX before XX%

handing next more Bemis go cover a will slide, over on Before some Slide would just words the to X. in to I Michael, financials who acquisition, detail, few

we is business businesses legacy organically Flexibles the First of and are all, has companies grow two as enabled our and the integration employees The excitement of the one, to the functioning progressing demonstrated simultaneously to positive, synergy very well. by which customers given proposition, the two very first year. focus the broader and sustainable value global Amcor’s more The a the of months and includes six from offering. targets has enhanced product been the surpass originally for set response

to are benefits. $XX procurement and of current synergies, in guidance $XX from overall $XX in synergies, delivered mainly in full year initial very fiscal million half, Now, and our fiscal reductions XXXX. of our for the the confident ahead $XXX in deliver we ability feel We've our by of million and overhead million million we terms which from first to coming expectations the was increased the end

integration very the the terms synergies. in that we're the about So of of today where good takeaway feel key and is delivery we at

and talk over opportunities. to longer-term back come of about I'll Amcor’s some hand and I'll Michael, then

Michael Casamento

X. experienced volume everyone. terms impact to Ron of period pass first negative morning, quarter, This Good Starting prior the of lower a of the Ron. with were the and through Flexibles constant mentioned. the and our just costs. which than related trends in segment continuation Thanks Sales the X.X% excluding currency input on reflects slide

opportunities about in the in strong up very synergy the the costs. business delivering well lag the we’re benefit X%, terms the for long-term business material we're combined and constant organic was recovering driven pleased Overall, the addition with business. Flexibles X% and way for performed, benefits, more really normal to time and base newly businesses the performed did excited of EBIT cost currency across in funds Adjusted growth of with by

In and improve Amcor’s reduce proposition, in the we months, North long-term the well a cost as last to base secured that since the number value on complexity in taking to strength in Latin as business. steps enhanced continue based commitments we've of America America, of the

Turning costs, were mix to during period product X.X% than constant the currency passing Slide of X.X% the Sales on on period. the X. terms prior Packaging Rigid by to sales material excluding driven in from revenue impact was lower volumes favorable flat raw unfavorable and given this after

cycle think currency terms, we’re particularly strong constant which the expected second I period. the quarter given in business the comparing in was

fill and overall made some exceptionally also the was our America, products the format. with market mix. North Beverage which specialty compared flat both launch in supported some growth were from benefited costs gains as share plants. customers in by which higher container last higher, X% with mix PET In of volumes volumes unfavorable containers, compares of to new This a beverage period, and strong in prior year hot range

this the return EPS business, earnings Argentina for In the Latin American, prior of quarter from was were mix business Most X% year than in as were full to our is year. and taking however, half growth expect cost benefited to the we unfavorable second account lower Packaging into importantly, volumes the early higher, guidance. last and profit period in inflation in the in second of the recovery Rigid of

was track expectations, keeps flow Slide cash adjusted for of in on million dollars us X, billion more generate line with our and the $XXX On to year. free than

by will is One been capital improved the basis, focus consistent to for in in has half reduce performance. the ratio overtime. ratio working capital our highlights business maintain on sales of we the these the to points XX to this And And working areas our a XX.X%. further like-for-like basis

complete and competitive a was it the flow million Xst a was great through to acquisition and by $XXX nearly S&P $XXX us dividend XXX reposting end more returned Amcor million shareholders million shares through in return cash record the through Of of to $XXX cash assets the the enable prestigious on million return than February divested to to dividend enter payments. Free proceeds in has during half. December. strong Bemis The track remaining was of from this, aristocrats to XX issue. dividend, cash

XXX we're June of it the August of through XXXX. million buyback share in that and end announced halfway track the by complete we roughly to XXXX, on We’re program

highlights. flow, times, to and X.X competitive with we pay sources XX, some terms, ability the simple balance a rates. significant provided funding be at with in we strong at a dividend, Slide simultaneously On capacity flexibility growth sheet core business, the access very balance In continue in range through cash position invest acquisitions. free provides balance have to of and leverage to sheet with sheet remains shares buyback a comfortable and diverse very to compelling the generate our Combined

good costs. delivering is business The lower synergy the building we benefits, XX. Slide on half outlook of our relation to in and moving for to expectations Finally, results our interest delivery first and mentioned

million, EPS range in previous for of $XXX currency $XX is adjusted the guidance, Our year $XXX for assumes increased lower an a which constant million million to XX% million synergy million increase terms. from is and interest guidance. fall $XX of $XX of inclusive now outlook previous pretax of to This net in costs will of the than to assets, X% range

of half in expectations first cash a year, XXXX approximately Corporate assuming our have constant guidance these impact All reconfirmed average half for reported of in the result, of of were headwinds EPS the and and per for to first costs, flow we all is prevail have the as the share. each and to currency with rates terms balance would tax an unfavorable line for guidance currency metrics. exchange $X.XX

back hand I'll to that with So over Ron.

Ron Delia

Michael. Thanks,

Slide of for minutes many to turn the described XX before. the And we're lift changed details term. a going we to longer Before recast has on focus not out we've it for Amcor and few you times call over which questions, strategy, the

call businesses advantage. actively number way those aspiration the four benefit segments. competitive it each differentiated capabilities, and in we which of product several describe is have deploy to from investors and small specifically way the value, And on generate in And a what of focused that portfolio strong flow cash businesses provide generate next which We taking key four win slide. stakeholders. through to ways we the our of for Amcor I'll real then finally, which managed And our means, a

generating creation the provides in value we And cash through dividend way X% This shareholders average about how value Slide capital and six and resulted for our EPS overtime. framework, a of this per yield. outcome over in allocating on it combined is years, about the last growth think XX. has of the perspective and Amcor's capital allocation year

clear And and organic continued through over growth looking volatility we when at a and have time $XXX visibility of to and dividend million of cost Bemis high, August are complete with forward value continued announced sources years next the along uncertainty the the year. few we acquisition, controllable cash compelling $XXX flow from last million in to of the to strong synergies fund buyback

touch did a not quarter, for organic committed we difference we Amcor, exciting I to remains As we've and first several topic new making the for And most years to now. fully on the which have us. sustainability, want it's at growth in been opportunity here a positive

In two demonstrated fact, XXXX by to million years sustainability in again in our ago we with another of committing first year, August agenda. over of investment our our $XX made accelerate public and aspirations January that conviction pledge last XXXX

of which on of journey, points view, XX. our some we've And course over Slide particular developed outlined are the

needs as and world actually And packaging. type primary always there makes consumer will be role we packaging of population Amcor grow, that food other a and touches for holds Firstly, medicine, consumer consumer products. that and and believe

First contributes, gas which greenhouse global is X% waste emissions. around itself, by globally and and of to reduce foremost, food XX%

action packaging responsible lot easy-to-use, packaging, know we packaging. well the as have get is, from now waste third a packaging through have solution lightweight, more importantly, result or the end and the that life to doesn't that on ocean. there on. and in of And the responsible Amcor lastly And is goes convenient, is that they a we want that great taking they and expectations the works Second, that to point looking consumers and front. and well, is way in expect list uniquely-positioned most believe And come landfill possible cost-effective, has that's

believe we three When comes solution waste, is required total across to packaging of system it responsible consumer elimination and elements. a

the compostable, design cycle first or recycled that impacts uses less smart First, environmental in packaging product recyclable, that means packaging life reusable the materials into account takes and that's from and throughout made that place. material

by packaging And dispose to second reusing. of participation that's And waste in right way, management be in facilities, or the or fact properly to or place, recycling, whether inappropriate is infrastructure is critical either in recycling, an returnable composting finally, needs or systems. consumer composting

comes also we There it responsible are not couple of Responsible no other important packaging. plastic. when mean does packaging to things believe

it's use and versus over footprint. as customers fact, relative advantaged functionality, our the management fully in will great plastic other participation it's and materials provides infrastructure continue plastic, grow overall because In environmental from to benefits believe time of and well. an clearly materials waste to consumer as And increases recyclable grows it other packaging

packaging design Slide compostable our making help that their packaging reusable, recyclable, packaging that's in including range XX recycled lower agendas, made lighter starting through a accelerate them packaging a results it’s it of already reality, or Amcor is sustainability footprint. waste packaging capabilities. bio-based own options to or a from is materials, with When carbon and customers to uniquely-positioned On package responsible I comes broad innovation think evident, offering of responsible Amcor course,

that the introductions. package these circular distributing In a well waste. and as and the as than economy the flexible new making today in addressing product, are rather available, a of environmental flow flow continuous back into both product these of products and the how options formats, available materials manufacturing rigid package, becoming go the there's into we're effects will And

also recyclable first In and with stand-up Thailand, barrier structure can lighter applications, in flexible a for tray protein is pouch products XX. recyclable see you multilayer weight for liquid recyclable Slide include examples on multilayer packaging, both the a which material, here of which recent a

other creating and resins have than the package which includes and XXX% existing in that options, we will recycled virgin of to format. of Rigid by brands XX effective in the by PET, by market formats And for XXXX. of of a from re-launches have examples more resin includes the these more iconic of packaging recycled more will PET tons Slide time an development converting packaging And the evolving PET supported to sustainable to demands And reduced million period. more cumulative process products by doing consumption in XXX,XXX converting our business, Amcor annual over than that tons so, responsible

and maximize entire our for the expertise and and sustainability our consumers as our through impact. industry perspectives, customers chain add network. social media time bilateral We've had finally, of through channels, summits others long-term And with through some a actively leader, our partnership directly podcasts now participants and we'll with the sharing supply and partnerships with number we're strong across to reach

our in the even determination future fully and and aligned develop do we're free with things two, a this and recent global our leaders pace. many economy with Amcor year plastic’s that on the perspectives redesign our focused two the chain which number waste joined Amcor and and of seat whom became discussions, at a were one, shared value clear; commitment, a our And suppliers table a example, new Economic had and Forum the As the World a customers of customers by to contributing from with suppliers. plastic’s in goals; companies, there's world's and more to largest of are

we confident our the And knew XXXX on industry we're make commitments. the positioned impact pledge, to that today that Amcor to better uniquely a to Amcor the our through on have we capture is opportunity lead and deliver opportunity packaging. than to positive and When world, announced ever more

the have to we results on long against Summarized confidence day. value. very delivering is of shareholder opportunities is on and excited one first we and potential integration half And sustainability our We're value our increased the priorities, with drive towards the financial Slide acquisition for pleased we're we and confident XX, growth XXXX conviction Capitalizing as year. outlook have that change the of we're and building of top acting drive our Bemis this goals. maximize every term many well going other about momentum to with progress with and

questions. take With that, we'll be to happy

Operator

[Operator instructions] Anthony Pettinari line ahead, with Citi. is go Your first open. comes question Please your from

Anthony Pettinari

of you downside at bit think interest the about about full raised a EPS to Has guidance and a I year? for the expenses the You that synergies year of you wondering cent lower just more math I when maybe think do organic is the think versus just And than middle the remainder higher my benefit cost if guidance, the the year by half think, about a from growth. range. the months And anything changed right. generally, how ago? or three I'm upside full

Michael Casamento

We feel really good about the first half.

think the I point been so our has clear, that increased you pointed we out. and for as year, guidance

range And XX%. is business half. otherwise given that you think we markedly we of good to full pretty remind from would see I We've X% don't what second to anything suggests a changing X% or range. today a organically XX% is terms, about feel what about constant think I is I the in currency that in again up the year. it the

the better may help, that If favorable certainly, get opportunities think maybe the benefits of of come the as true acceleration material range. we would there. top-line on from inverse, be bottom about high would of and help to the would to And where think about the hit the raw obviously, end synergy inverse range, continued environment us we a more obviously growth

I financial downside away Although, why that take on growth the we've today range. we've EPS can minimized the from of bottom year, raised the which you end what the risk is is think

Anthony Pettinari

anticipate any are China just in impacted? Amcor's you And are then impact maybe corona that virus seeing And do you just any footprint switching us gears, remind from or and you disruptions? can regions the

Michael Casamento

contextualize big by China. business an the day. got it, But Yes, a flexible to it packaging in changes evolving just it's topic. has Obviously, Amcor

virus. the epicenter We the in about was although, XX the spread the plants provice, Hebei country, none have of across which

sales. people X% it X,XXX represents of and about have We roughly

us. business it's big important So a for

week. by last functioning. all we're all care because running actually are our as none importantly, customers far products. period, plants virus. And don't as our at our know, of through have been all we operating, full operating, are of back today, right not but employees Firstly all tilt, employees is Year stricken back the and operated we week the this online which have great. Many not our businesses the most New supplying health and are and They're Others came because as

will the have be while Any the we us. the in seen. would in it's going front impact not us any it's first an half. the And impact the remain sales, half I on material in scheme impact on business the Obviously, didn't it's second Now of business X% be our business part forward, and of story Amcor's ultimately as in real important grand of for big a to going be said. of to about

Operator

Your next question Please Ghansham Baird. Panjabi with ahead. comes from go

open. Your line is

Ghansham Panjabi

we off of commitment it Flexibles. secured you this the first relates give dynamic? long-term it's incremental guess, just purely think to about more I on color this the North Is layering comments how extending few And just should terms? it in as or the us American if next in business this contract incremental, is Can on quarters?

Ron Delia

pickup good has of customer so highlights mean a we of the the I been reaction. far, feel that. it's the because one really about Yes, good integration

we deal there's be the as overlap customers. about, should that should degree a this is not talked any with great know because way, regions You around not be similar world. in a products similar It exciting in of threatening for

seeing number we customers of think a itself combination today. in it as complimentary a wealth highlighted of two commitments, companies. which are in And rightly that's I So manifesting the

down in important, would secured is, layered business. and wallet with a I customers this are all think of at because hundreds be that wouldn't customers. impact say incremental been that's in, material some think four in deals five needs with a it's we're or out these about little talking I business share thousands combination I of fact bit customers locked but of of there's gain and that, what of a whom of to of

us I form that positive and share some, business what think we're incremental maybe the we a locking substantial any over And So say in of revenue anything, is it let's if negative time. up avoiding little are says picking up to benefits synergies. getting

Ghansham Panjabi

million half, And EBIT up the synergy. plenty was it first of terms half which for the of from for versus like Flexibles, previous about was first just $XX in looks it

of $XX lag came so And of cost the you how much the raw timing material recovery? million, it referenced remaining from of

Michael Casamento

million a $X number quarter. the We second similar first the had had in We about quarter. in type

organic from say materials. of been the So part we about guess, But that happy could growth, all X% or pretty generally. up material X% raw have the I organic growth of the recovery, we're would you of had with raw the lag,

Ghansham Panjabi

half second it And the see right will that continue into you now? the way

Michael Casamento

to be it Look, remains seen.

than think is for and But that quarter look you material pace in little looks of might it's overall movements you spend, of of portfolio if I to the global in. relatively that, anything. say, across difficult have the benefit bit the we're beyond a a raw benign more it us benign

Operator

Suisse. next Your Larry with from comes question go Gandler Please ahead. Credit

open. is line Your

Larry Gandler

Ron, in just The following protein. here a North says on North onto value high that. grew America America question statement volumes

food is, us question that pretty First care the think, America did is some volume I overall grow. And volumes challenges, North data weak in in things the personal of external analysts performance America. one showing and North is

Just you if you maybe of up talk about picking growth. could wondering pockets guys where

You mentioned a few here.

talk volumes first you is did where that two, can question grow? about growth? So capturing you're And overall

Ron Delia

both Europe, Those of which because as to big and engines First, Volumes Flexibles. North your which really simple in our markets those businesses, yes. in grew pointed pleasing, in question, is dynamic answer are in are overall growth you two are America first neither two out.

those it's good little see, So of growth can both absolute bit grew and a in volume businesses, if America so we North in volume through Europe. to get

pet care. in similar which food out regions, markets back end in both into coming and liquid coffee, are cans of particularly service big pouches, of protein, in In outlets, healthcare, the fact, products,

of seeing growth. number we're add So the good value segments, a higher

higher with mixed X% it's towards And you different maybe our all to change think FMCG add it's grow of up and or between space, to much space. population, no you migrate X% part the generally different in I think that then volumes that's I if of period-to-period. types aggravate customers value whole then kinds that to were the overall in Generally, impacts surprise have going mix of from to segments. of types us don't there

Larry Gandler

With customer growth? the volume contributing to mix, regards town at of are up end to the large customers picking your or you volume your are small also

Ron Delia

little that driven some as some In by -- segments is larger of of those a the growth bit both. It's more just driven I the of mentioned, customers. are

also But We some that with customers we're of the segments, see customers of their the some some they're we larger discrete share. think competitors. or dairy losing is can where share I know are that retail in cheese one of losing of smaller certain larger picking up the at

engine Obviously, is businesses So the also a smaller the that combination. coming disproportionately incremental the it's growth the these big serving. we're companies in MNCs, but from is

Larry Gandler

Mike me, from question side. finance the last And perhaps for on

interest line million $XXX and you the the Slide capital, at million, maybe items you million, some in dividends X, tax to that's million going those from flow flow, the $X and that's call for in comment with minus after above that $XX a cash cash $XXX Looking significant and free look in going $XXX adjusted to cash evolve less second like how to $XXX on so the a items reductions million. anticipating even thing CapEx, flow billion of target, big jump free half? maybe one-off, it the at into and working half second When are same

Michael Casamento

second so seasonality half, Typically, flow half, in in there’s the our rate is second there. do and stronger cash get the much we higher

flow standing the to first be the continue second. there’ll in will improvements as in half that working some expect We capital we’re

and So generally expect the second speaking, trend around half more see that's in that's what the seasonality. normal the we we

Larry Gandler

seasonality capital earnings get million? simply and So working you will that to $XXX

Michael Casamento

correct. Yes,

Operator

comes next Macquarie. from John with ahead. Patel go Your Please question

is open. Your line

John Patel

obviously, recapturing there. cost Appreciate of Pepsi flowing the you of likes some half improvement Is share? just terms of couple that, driving part too? getting of Rigid, in of Just what's through this had benefit a in But you’re and second that terms sort sort restructuring questions, the movement. comps flagging -- of of

Michael Casamento

the We're would first question, year more mean, second all and which first of really be this pretty versus on that it had of look with did performance. were to the in did that things. okay pretty growth It's lot I year's cycling year. a quarter. year. do last last period when flag, this at a sort tough, of good XX we we It's We quarter, at It's pleased has than we day first you a quarter flag combination with with basis John. difficult

America, segments North better we because in year, obviously mix, customer but of Latin product markets have in strong to not extent end had we a had again growth America, containers. in with specialty particularly and year Last some had our just in And we our fill this hot year. outcome mix mix last

We inflation year, an in early which also Argentina last recovery had of benefited.

perspective. in QX really do So from difficult XX in But made to those Rigid. profit two day business second half period things a growth comparative a for the it we expect the to back get

good growth volumes America, hot volumes were continued much too. with have robust flat is going of fill had up pretty points be so percentage we couple of Latin to thing that The overall X.X%.

cycling we growth. and to So half, which second now it's in will profit competitive conversion just a about period expect lead profit better

John Patel

question, the seeing the result, in in negative also benefits appears result the I but state, negatives, this continue it of out seeing where where forward? impacts, you're think in I in in perhaps you're positives called impacts are steady this order. relatively of and But second know where American to just looking out, North and call you you've sustainability seeing result And and terms terms this

Ron Delia

more opportunity we us into as John, more of and an becoming I further. it get for think it's

would I don't that negatives any see say So at we in the result all.

result comments some the from of customer out take positives agenda related you that sustainability the come to of fact, In made the the our would about can we commitments.

agendas to required not want with the ever than just re-upped but also inclined more bigger innovation on completely the of for innovation And sustainability. about work largely the these are our most and reason to and we because our with we've of Customers shared someone earlier, The sustainability us aligned that we're referred is before. to of now because because customers acquisition footprint, asked that developments. in Bemis

don't I highlighted to increasingly some in who I very thing, our other is last that on of number format food an our there's generally doubling role and today materials. the customers customers balanced suggests in the packaging a are and that which than launches comments third six over alive PET which we if product been I the dialog and the and waste. from And But been months, supportive then down is reducing including new and supportive think in has that well plastic, of know thing there have its very format externally, more guess gases anything. been plastic reducing it's greenhouse us

then PET, vocally, brand in or come particular, out two had PET in basically language And to strong in fairly the owners support fairly the we've major format. very,

So say, financial, generally, months no took but real at about the view six all, or you negative but not impacts the two if John, environment three in. we’re positive maybe I'd indicators,

Operator

with Your Bank. next Please go Debbie question Jones line comes Deutsche your open. from ahead, is

Debbie Jones

really can on fixing where to do other then base want more First, made or the there the comment if I still need be, wanted the What only about fixing do to that about there? in you're you focused And get are you Latin to detail some get the -- cost things? see you thing is to we that America. to

Ron Delia

the part question last I missed. Debbie, of your

the tailed the end that part question there. first you and to please? America And Can of the need Latin end we do there's repeat anything the in there. The was whether at off base cost about else you

Debbie Jones

that it, said. basically might you are was as the other that things just still well? what or in Is region address you It there

Ron Delia

now. particularly in flagged Yes, few a the legacy Latin this then America which times business to relates the Flexibles business, BMS and we

are we of what context set doing, well, first. First the let's all,

hold thing took we're acquisition quarter or the and which headcount performing out first at down, in a had high very way level So of we that taken we've happened looking costs flagged. the get and business footprint as mid-June And the a we've lot we last losing the well. and year year before was a fourth of at the closed, deteriorated before ended closed, business fiscal quarter it in bit, the was last money, the a two some in it lost up sales

those profit from business taken month. So with perspective were is early very improving a And actions each on. the

takes does to from improved absolutely longer them. regenerate, longer lot it take Despite fact and actually always sales the improving profit that perspective. it's presales quarter-over-quarter, So to month-over-month it's it lose regain to a a the

to the the working we've it so the can past. on cost has addition actions be should back getting in top we're hard been taken, and line And in to where and

would be that So thing. other the

even that more And a before, and segments is but simple. that then number say it. this business thing particular, the out complicated haven't we business, flagged And more historically in I point to portfolio see a would keep it's of functions, when we in we focused the legacy been as try Bemis We I things fairly probably in. third business, the

which business, step anywhere look very business, well. had we're half. venture that one small close that in so we as good it’s sold We a We taking to out a tube else in at laminates business, took not And we're world. first good in in produce one the is the a a joint of Brazil,

we that further. towards bit so portfolio that a simplifying out as a little of And JV step sold

So of and perspective. focused portfolio making combination from going costs we're line it’s getting top a and the again sure

Debbie Jones

plan of is not XXXX. in of hit if then the people by you How what What really from? terms of market on recycled for the you be of that But on is you Out market my something answer. and does identify And versus X less do come sure that Is acquiring second addressable or this volume virgin type implication where it’d million XX, then for customers? I'm tons. you Slide XXX,XXX into just that kind if is? effect can just of And that? of regionally question, at cycling there? curiosity, tons on do what end or curious mix target the resin resin, that you it's And on virgin, this the market by new below market,

Ron Delia

spend we asked because it, topic which on time Yes, and little an it. a I'm more glad about it's important you

rigid So North particular Latin space this in America. is all and America, the about plastics in

rigid make current the referring the we to the XXX,XXX containers that's resin where path. Americas of far primarily, based tons what house on a PET as the number reduction year, of glide in that's there. So out virgin as we're And

double the XXX,XXX reducing of kind actually assuming are we're of that resin year. point be We about we'd of virgin putting pretty much And continue that percentage we're recycled we seeing an now this where new kind by inflection material at year. it's level, processing our a tons

time I that using than it's that’s more be, likely that one conservative. I less. over But more fairly conservative, think in it's Now anything number. other There's for no reason rather to think us than

resin the nevertheless, a of today, see the of replace tons we customers, just PET five XXX,XXX that path to or next we're as that's we're business And and then have doing and with mix all normal on But us as with that's just years. where at. -- recycled virgin in six still existing well glide

out year over of that sourcing As tons six material, that or or we the we a five million recycled over do cumulative have that tons in demand. XXX,XXX years, over five plus that's been period, six market a will of

the that's And can play to capital is space. but because those required resin, it going that recovery post One active that seeking role bottles so and here that. creator and deploy fund recycled to a in for just and much convert required the demand infrastructure capacity we're who that needed management investment be flagging we important, market fund as actually consumer underwrite are we'll not in will into only we invest to be be also think helps processing waste to to that's

Operator

go comes ahead, Please question with from Your line Brian your is McGuire open. next Sachs. Goldman

Brian McGuire

Ron. Just wanted to your last and piggyback response that question there on

lot seen lead couple you've you. increase a and a put supply the lot made to supply. make months, infrastructure others companies actually wondering to PET have place buy going Actually just in lot of commitments of see along the an of I'm that and use PET already the chain and to start into that's years, our you've what in be the to interested the recycled last to in processing the of seen a more waste you if have progress collection to over for it. side, couple next supply to Just available targets

Ron Delia

I good aspirations the mean, great and the has Brian, right? capital to expectations everyone's and the infrastructure and is got question it's a now follow. challenge, but that

a I assess think period over short it's to of hard time.

there. is I think generally momentum the

I you commitments. of see form in increased that think the momentum

willingness get companies see to I Amcor our recycled buy You like and we can readiness hands about, our talking know of every material pound on.

big owners see can the making similar comments. You brand

You back, front collections. the and bottle to drive helping on launch can to up called initiative every end which see an Pepsi Coke is teaming

public You putting material, commitments money about behind it’s buying recycled making Nestle coming. think I see so

that and components investments I the the could the the on meaningfully needle the supply. all I don't over right days know XX But what's be place. we in specific direction required is going to headed momentum are would all point move last to that of falling think into

Brian McGuire

question outlook. just the And a on

in little you north previously after CapEx the It of from talked D&A of stripping amortization and the in half. $XXX think being looks bit a like it ran million million I $XX to in range. the kind XQ about of $XXX was kind just million out similar deals, first only

$XXX in thought the is good little what maybe bit it's coming that Just year, going than a be or to a if wondering million if lower you initially? for number still

Michael Casamento

that in around in would just spend behind. so little we line first a mark. the were of behind that CapEx slightly $XXX with million depreciation, Typically, half We kind

size with that's integration payments. think typical pretty I that an we’re doing the when of you're doing

to should that's At might be full there stage, but to and what We expected you the be see. got expect slightly this year. thereabout we by low

Brian McGuire

me, And of EBITDA for last then to the from kind outlook. second trying the one bridge to first just just half half

sounds in was timing was half. second in half, that first not $XX $XXX the think like may recur I benefits million the maybe of EBITDA the it million that some recover --

for point $XX we then pick so. $XXX could starting maybe seems the seasonality, $XX million capture, million it increased up maybe or is million synergy like So adds if

is So EBITDA of the about the the in through kind high nine directionally year? right, something of that million back in $XXX half

Ron Delia

Brian, there a basis. lot you on we're of different an ways. our mean, EPS I guidance giving get can

currency I for XX% that think to get year. to the going X% for us we're key the EPS is constant to

Operator

open. Your with Please Johnson go next your question Richard is comes line from Jefferies. ahead,

Richard Johnson

contracts to you was just I made you in around acquiring seem have to significant the returning Ron, Flexibles trying in in the to place the term you that long all commentary arrangements longer prior North the remember term signed America. business, to put price context of Bemis that involve put just themselves pretty I the in which incentives.

one of they to understand thing I should trying the separate and So about what you've process? done is sort have Is what think I'm part or the to it same same how done? completely of as just of it sort relative

Ron Delia

of to referring progress had where of really that customers where business, which up say that that's dozens I of place. none business basis. matures individual in we've thousands an No, in just place a positive thousands customers FMCG of it's that customers made separate. re-upping mean business and were in with has customers let's to We're there with when momentum contract, we've just Any the that look small go of is that good the are where are terms a it still large on has. we contracts bought material

the other not of they’re In the is commercial in to side momentum probably the very aggregate than business. positive fact, on that material suggest

Richard Johnson

in you was And for what hoping feel from I give then Rigids, your to me raw first material, the, on just a able half be might the was restructuring how contribution what on the program?

Ron Delia

back million closures first with benefits first the the so Not this of $XX year, would $XX do We've plant year flagged. get which six million last several deliver expect. will we program. year. fiscal to end whole $XX that the calendar the far. remaining total million didn't going much the We had have benefited benefits We're fiscal later on lot this months that that million to $XX as a about in of We at come of we through $XX half got to million

Richard Johnson

your got right? And the in then America. that overall capacity Is to in net plant net, any you've reduction that that in confirm closures system North just result don't

Ron Delia

consolidate intention essentially lower mean, to I on fewer structural the in types Not in any really of and margin in similar there base, the way. fact be and might cost to base but not products, meaningful of growing is the volumes cost in fixed intention. certain facilities. number that's the The

Richard Johnson

who with your that of -- are all I the was seemingly they the sense but makes mode what perfect to in sold reconcile get and in producers business, out capacity, just way your out. And full of which common kind can doing want beverage adding expansion fact, you're obviously share it

aggressively? sort So you when of understand, effectively growth your and trying all to very you that are put business to the taking you I'm they out just in grind capacity same the opportunities color to

Ron Delia

clarify. just Richard, to No

we're scanner see see been our data. assets just think I No, grow, this said I that smaller growing. mix take we overall the a formats market, and and business are the the plants non-alcoholic it and that number and based has If happening of factories. putting particularly beverage in is number out liquid beverage what's taking to market the capacity an cans, a do assets of a But package is back and capacity, older Speakers]. we we in we're step retiring growing on X% not around [Multiple where just about there, expecting

it's So anything not proprietary.

up half our see X%. year. that X%. of X% calendar the market the with We would see fiscal PET portion market at see which back And at growing the canned of growing year, the growing also volume we lines in We about about

continues format there's and with for well what well to market, So grown at both. plastic that us it cans is enough as says to have growth grow least

the And this that in. growth and part the But things been has participating much, interested or and are seltzers growth. in been of been data the as can space. has alcoholic market and like particular where in not suggest I been beer outstanding extraordinary, think industry in a hard we've that's I the it's that, think would

Richard Johnson

the chain at is, from key to what the numbers this if converter the that than to solving higher about, look obviously the asked about just get view well? the to markets investment then the are interested entire the question was talking to reason think Nestle the had your I value that or the seasonal right across actually the this than sustainability, the in process through I converters if you packaging I on they’re finally as customer, and just consumer you chain. particularly holds numbers And industry doing. material issue make significantly they’re part on, producers of raw And mean,

So in entirety. understand in is look at at customer is that when the entirety, problem it key, actually really its its And trying stand in to it or you I'm and solution holds all or the producer? the look and issue just raw who the back the the material

Ron Delia

regulator a brand its think that actually parts private waste owner, or management I converter, provider equal enterprise consumer. be and

So I actually think those equal it's parts an three.

less about the raw the probably think it's a material and retailers I less little suppliers. about

I in why raw and future we good think it's you more provides our that's a envision about those about no which combination packaging, other we really today supplier need will material feel because actors. of provide. you don’t And materials position, I and other design ultimately the think need functionality into

there. critical has role So critical, the a converter

with the in has mind. initially kind in owner things the not owners with on landscape place are in to the right are focus to to mean because going infrastructure a live mission and on. in think we products critical, the sure I and it's it's I of be a move cheaper brand tradeoffs have brand and set days. is management these everywhere of jurisdiction quickly not depending to the Waste role going early that were fragmented making

not consumer, the of what consumers underestimate composting, their or can They And reusing, facility, is And reuse then or something the insignificant different I recycling. do recycling, compost have the here to their even use doing make to whether use and system, their do we than they've -- or think the shift. have answer that's because been or don't an what role of today.

genuinely So value equal the of I parts those contribution the parts equal those four from believe four its part, chain.

Richard Johnson

And material sort do loudly know of and and arrangements on and why so packaging what the formal your question, and know I to so are. any of don't your cycle I with talk just Do might systems Whereas develop sort and forth. you the customers development do project key of I about they very have reusable producers and products? asked well you of that any corporate reason agreements is customers particular

So find to those it's so easy out.

anything thought us customers? of there you particularly conjunction that to sort I've NGOs. of help can any would in point So doing the Is with what is converter understand

Ron Delia

of commercial products are development launched. joint you agreements will, Well, from we that typically development the Those don’t a in is got have in product like with several what activity almost joint own We manifestation the by if product agreements our contract, a customers segments. called separate come where you've do development number contracts or clearest isolation. new are business

our that's that the that the fact, customer have associated to highlighted kind innovation business, we've In from don't names development before. with and But the entire leads all across where new examples we those. highlighted of product and today comes

Operator

Scott Rimor is Equity from ahead open. your Ryall with comes Please go question Research. Your line

Scott Ryall

in that. all I Slide of some Ron. thought this please? XX, How sustainability you've in shown around that On respect have pouch specific a stand-up do been slides, multilayer the questions the context you define recyclability recyclable being pouch and of

Ron Delia

the this I laundry laundry required detergent for different functionality pictured together that's have it's point Yes, that good line, that's that provide layer here. home brought polyolefin -- combination a materials to in to recyclable of it's particular or multilayer a because a care this And it's -- pick which up product the that monolayer. it’s think of doesn't it’s set is so a be single case, in are good generation, materials,

being there companies gotten has new and leading by are space as the around recyclability, industry of developed there definitions. behind economy authority standards definition facilitated NGOs, signatures called global is what's and the particularly far commitment Foundation, on As from which MacArthur that the the are and Ellen XXX out plastics certain

of has means and product there meet what recyclable would definition. be is recycled that specific definition this particular today scale, so, a someplace at And to

Scott Ryall

you'll was in -- you getting Thailand, had scale. in really where I that scale thought said was at recyclability I with in so that So also through the that I to they comfortable talked Thailand? you recyclable the come Are -- at market. think is

Ron Delia

industrial scale, has because the the to developed be definition is I different it don't an that at in recyclable infrastructure stage world. recyclable in But parts at of the is this know Thailand.

the guide infrastructure in And to different also so what a markets around agenda the it's be should world.

Scott Ryall

And you creation? just which would clarified as your how then quick American demand a the on what want and of Can Rigid next question -- your that virgin signal on you less to North in which XX, you me slide, represent virgin resin your confirm much for please? you resin

Ron Delia

we think out on We're the buyers publicly. break don't Speakers]… it [Multiple I one larger

Scott Ryall

a guess, you getting I of material proportion, to the a like XXX,XXX up material are But of you said tons? proportion

Ron Delia

converting Let going the resin in me Packaging bit Packaging help be than our year, -- PET our financial year, more a the business to resin our This will of little in Rigid resin. recycled we're exit and Rigid XX% there.

why going pace we referred earlier accelerating We're an to that's of as and So we're convert proportion to exit recycled I the rapid year over very XX%. resin at point. the this at inflection

Operator

at call back no the are to this remarks. There I'll for questions turn time. management further closing

Ron Delia

thank the there, you. operator, on call And today. us joining for everyone Thanks Okay.

Operator

This concludes you very for Thank call. conference me. much today's joining

disconnect. may You now

Amcor (AMCR) 11 Feb 202020 Q2 Earnings call transcript