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Amcor (ASX:AMC) packages up more growth in HY21

Amcor Plc (ASX: AMC) has announced its FY21 half-year result. Amcor revealed more profit growth in the report.

Amcor is a large manufacturer of packaging for food, beverage, pharmaceuticals and so on. It makes both flexible and rigid packaging.

HY21 growth for Amcor

Amcor said that its net income increased by 65% to US$417 million whilst profit / earnings per share (EPS) went up 71% to 26.5 cents.

However, Amcor also reports some ‘adjusted’ results which exclude items that management consider as not representative of ongoing operators.

The packaging business said that in constant currency terms, its net sales increased by 3% to US$6.2 billion.

Amcor’s adjusted EBITDA and EBIT went up by 4% and 6% respectively (EBITDA and EBIT explained) to US$948 million and US$743 million. Net profit grew by 10% to US$522 million and adjusted EPS rose 14% to US 33.3 cents.

The only decrease in the numbers was an 11% fall of free cashflow to US$276 million.

Amcor made a few comments about the Bemis business, which it acquired in June 2019. It has continued to integrate the business and it has delivered approximately US$35 million of pre-tax cost synergies. Amcor is expecting cost synergy benefits of around US$70 million for FY21, there had previously been expectations of a range from US$50 million to US$70 million.

Amcor thinks it can deliver total cost synergies of US$180 million by the end of FY22.

Amcor Dividend

The Amcor board decided to declare a quarterly cash dividend of 11.75 cents per share, up 2.2%.

Management comments and outlook

Amcor CEO Ron Delia said: “We have built momentum in both operating segments resulting in adjusted EBIT growth of 9% in flexibles and 10% in rigid packaging in constant currency terms. That momentum translates into higher expectations for the full year with adjusted EPS growth now forecast at 10% to 14% in constant currency terms as well as an increased dividend and additional share repurchases.

Amcor’s investment case remains as strong as ever. We are well positioned to continue generating growth from attractive consumer and healthcare end markets, our leadership and scale in emerging markets and our extensive innovation capabilities. With annual free cashflow of more than $1 billion, we have substantial capacity to create value for shareholders by reinvesting in the business, pursuing acquisitions, and returning capital through a compelling and growing dividend and share repurchases.”

Summary thoughts

If I were trying to outline a bullish case for Amcor, I don’t think I could do it better than how the Amcor CEO said it.

It seems like a solid ASX share with good dividends and steady profit growth. It won’t shoot the lights out, but I’d much rather buy it for income than the ASX banks, BHP Group Ltd (ASX: BHP) or Telstra Corporation Ltd (ASX: TLS).

But there are other ASX dividend shares I’d rather buy for income payments like Brickworks Limited (ASX: BKW) or Magellan Financial Group Ltd (ASX: MFG).

Even better than Amcor, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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