The operator welcomes participants to the Amcor Fiscal Year '24 Results Conference Call and introduces the speakers, Tracey Whitehead, Head of Investor Relations, Peter Konieczny, Interim Chief Executive Officer, and Michael Casamento, Chief Financial Officer. The presentation and press release are available on the company's website, and the speakers will discuss non-GAAP financial measures and forward-looking statements. The second slide lists factors that could affect future results. During the Q&A session, participants are asked to limit themselves to one question. PK thanks Amcor employees for their hard work and dedication, which contributed to the company's improved financial performance in fiscal '24. He also emphasizes the importance of safety in Q4.

In fiscal year 2024, Amcor maintained its industry leadership in safety with a 12% reduction in injuries and 73% of sites remaining injury-free for 12 months or longer. The company's near-term priorities, including providing a safe work environment and staying close to stakeholders, were successfully delivered upon in the fourth quarter. Amcor expects to continue improving in fiscal year 2025 and is focused on providing stability for the business and delivering for all stakeholders.

In the fourth quarter, Amcor reported strong financial results with solid performance and a return to volume growth. Volumes, earnings per share, and free cash flow exceeded expectations. They expect to continue this momentum and deliver annual EPS growth. Their capital allocation priorities and strategies for long-term growth remain unchanged, with a focus on organic growth and strategic M&A.

The financial results for Amcor in fiscal year 2024 were strong, with growth in volumes and margins due to improved customer demand and proactive cost management. While healthcare and North America beverage businesses remained soft, the rest of the business saw growth. Price mix was impacted by destocking in healthcare, but cost reduction and productivity initiatives resulted in significant cost savings.

In the fourth quarter, Amcor's total cost savings for the year exceeded $40 million, with a strong focus on cost and productivity actions leading to a 9% growth in adjusted earnings per share and a 4% increase in adjusted EBIT. This was driven by improving volume trends and strong performance in the company's underlying business. Additionally, Amcor's focus on cash conversion resulted in adjusted free cash flow of $952 million, and the company returned significant cash to shareholders through dividends and share repurchases. In the Flexibles segment, volumes increased by 3% in the fourth quarter, but net sales were down 1% due to unfavorable price mix, primarily in the healthcare sector.

In the fourth quarter, Amcor's Flexibles portfolio experienced solid growth with a 5% increase in volumes, driven by improved customer demand and normalized order patterns. This growth was seen across most geographies and in categories such as meat, cheese, home and personal care, and unconverted film and foil. North America and Europe returned to overall volume growth, while emerging markets also saw strong growth. Adjusted EBIT for the quarter was 5% higher than last year, with margin expansion due to higher volumes and strong cost performance. In Rigid Packaging, volumes and earnings trajectory continued to improve in the fourth quarter, with a 5% decline in volumes, 3 percentage points better than the previous quarter.

In the fourth quarter, the decline in net sales was mainly due to lower volumes in the North America beverage business, but volumes in the rest of the rigid packaging portfolio remained steady. Earnings and margins improved due to cost reduction and restructuring efforts. Cash generation and working capital performance were strong, and leverage was in line with expectations. For fiscal '25, the company expects to continue growing volumes and earnings.

The paragraph discusses the company's expected adjusted earnings for fiscal year 2025, which are projected to be in the range of $0.72 to $0.76 per share. This represents a 3% to 8% growth in constant currency. The guidance also includes a potential EPS headwind of 4% due to normalized levels of incentive compensation. Excluding this headwind, the company expects high-single to low-double-digit growth from the underlying business. The guidance also includes expectations for volume increase and trading performance, as well as interest expense and effective tax rate. The company anticipates a phasing similar to previous years and strong adjusted free cash flow. They also plan to increase capital expenditure and reduce leverage within their management range.

The speaker concludes the presentation by expressing confidence in the company's strong performance in fiscal year 2024 and the expected growth in fiscal year 2025. They mention a focus on cost control and productivity, as well as investments in organic growth and strategic M&A. The company also plans to maintain a strong dividend and generate value for shareholders. The speaker then opens the floor for questions.

The speaker discusses the company's recent performance and states that they have been pleased with the increase in volumes, which was broad-based across different regions and categories. However, they note that consumer demand continues to be muted and they do not expect it to improve in the upcoming year. The speaker also mentions that their customers are looking for a balance between volumes and price, which is reflected in recent announcements.

The speaker discusses the company's improved ability to win with customers and attributes it to their value proposition. They also mention that destocking in the healthcare business is still impacting them, but they expect some improvement in volume in the future. They clarify that the growth is not due to consumer demand, but rather other factors such as destocking. They do not see this as a share story and are cautious about expecting a significant improvement in consumer demand in the next year.

The speaker discusses the company's performance in the healthcare end market, which has been their most challenged sector. They expect destocking to continue for at least one more quarter, but anticipate an improvement in the second half of the year due to their strong relationships with global customers and a rebound in volumes. They project low to mid-single-digit volume growth for the next year. An analyst asks for further clarification on the healthcare end market and the speaker confirms that it was down by high-single-digit volumes in the fiscal fourth quarter.

Peter Konieczny responds to Adam's question about the outlook for the healthcare business, stating that it is a strong category and any challenges would be due to the normalization of inventory levels. He confirms that volumes have been down in the high-single-digits, but expects destocking to end by the end of the calendar year. After that, he anticipates a better volume performance and a return to historical growth rates in the mid-single-digits.

The speaker discusses the impact of destocking in the healthcare sector, which has been similar to other categories in the past. They mention that the mix in Q4 is unfavorable but will improve in the second half of the year. The company has refrained from share buybacks in order to focus on M&A opportunities. The buyback is just one aspect of the company's overall capital management strategy.

The company plans to use its strong cash flow to first invest in organic growth and then potentially pursue M&A opportunities or buybacks. The company has experienced significant cost inflation in the past few years but expects it to abate in the future, with labor costs being the main area of inflation. The company's cost inflation in the most recent quarter was significantly lower than the previous year.

The speaker discusses the current state of raw materials and labor in the company, stating that there has been a slight increase in raw materials in Q4, but overall it has not had a significant impact on the business. They mention that they expect the first quarter of 2025 to be relatively benign in terms of raw materials, with potential slight increases in Asia. They also mention that they have given a range of growth in their guidance assumptions, with raw materials being a factor in that range. The speaker then addresses a question about the outlook for beverage in North America, stating that it is more discretionary than other categories and they are unsure when volumes will turn positive.

The company is facing a decline in the acetonics category due to low consumer demand and exposure to underperforming customers. They do not expect a turnaround in the near future and are being realistic about their volume performance. In FY '25, the $400 million cost-out achieved in FY '24 will have to be brought back into the business as volumes pick up. The company has generated savings of over $440 million, including $35 million from a structural program.

The business has been focused on managing shift patterns and operational costs to adjust to lower volumes. Procurement has been a major driver in this effort, and discretionary spending has been tightly managed. The company expects to see structural benefits of $35 million in 2025 from a cost-cutting program. They will also continue to see procurement benefits and manage operations as volumes increase. However, labor may need to be increased to handle higher volumes, but the company has become more efficient and will continue to see cost savings. The D&A charge in the fourth quarter was lower than expected due to various adjustments, and analysts should consider this when analyzing the company's performance in the future.

The speaker explains that depreciation and amortization expenses have decreased due to reduced capital expenditures and restructuring. They expect depreciation to increase in the future as they increase capital expenditures. A question is asked about potential areas of the business that may need refreshing or could be a drag on future growth.

The interim leader of the company believes that the business should focus on attractive categories, such as protein, coffee, healthcare, and pet food. They also believe in maintaining a balance between developed and emerging markets and may consider strategic acquisitions in the future.

Peter and Michael provide some additional information in response to a question from John Purtell about the flow of volumes through the quarter. Peter explains that he prefers to look at quarterly performance rather than monthly performance and mentions that overall growth was 1% in the fourth quarter, indicating good momentum for fiscal '25. He also notes that both developed and emerging markets saw growth, with developed markets returning to growth despite healthcare destocking. Another question is asked about changes in substrate preference, particularly towards aluminum cans.

The speaker addresses two concerns: the impact of competition between aluminum and PET in the beverage market, and the effect of regulatory changes in Europe. They explain that while there is some competition between the two substrates in the CSD category, it has not significantly impacted volumes. They also mention that they are closely monitoring regulatory developments in Europe.

The speaker welcomes the regulatory developments that aim to reduce plastic waste in the environment. The company supports the move towards circularity and has made progress in developing recyclable products. They expect to spend another $60 million on restructuring costs in FY '25.

Peter Konieczny responds to Nathan Reilly's question about the company's spare capacity for managing demand growth. He explains that they have a balance between manned and machine capacity and are constantly flexing to meet demand. However, they face challenges in operationalizing additional machine capacity when needed. He concludes by thanking everyone for their interest in the company.

The speaker emphasizes the key messages of the call and expresses satisfaction with the company's performance in the fourth quarter. They are confident about the guidance and anticipate a good year ahead. The call has ended and participants may now disconnect.

This summary was generated with AI and may contain some inaccuracies.