The paragraph is a transcript from the Amcor First Quarter 2025 Results Conference Call. It begins with the operator introducing the call and handing it over to Tracey Whitehead, Head of Investor Relations. Tracey outlines the agenda, noting that the call will discuss financial results and will include non-GAAP measures and forward-looking statements. She also directs listeners to the Amcor website for additional resources and requests that participants limit themselves to one question during the Q&A. Peter Konieczny, the CEO, then takes over, expressing satisfaction with the company's solid financial performance in the first quarter of fiscal 2025 and reaffirming their guidance. The presentation starts with a focus on safety.

The paragraph emphasizes Amcor's strong commitment to safety, highlighting a 13% reduction in injuries and many sites remaining injury-free for over a year. The new CEO values this focus on safety while also aiming to enhance the company's growth through strategic actions without needing revolutionary changes. Prioritizing a customer-first mindset, the CEO plans to accelerate organic growth and improve customer relations. An immediate step towards this goal is appointing Fred Stephan as the Chief Operating Officer.

Fred's key responsibility is optimizing the global flexible packaging business by eliminating regional silos, sharing best practices, and improving operational efficiency. The new organizational structure empowers the global management team to focus on strategic growth and shareholder returns. The company aims to enhance service quality and build growth opportunities pipelines while maintaining profit margins. Efforts include expanding the commercial excellence framework and utilizing innovation centers to develop sustainable packaging solutions that reduce waste, lower carbon emissions, and improve recycling, thereby strengthening the company's sustainability profile.

The paragraph discusses Amcor's commitment to sustainability and its strategies to drive growth. It highlights the appointment of David Clark as Chief Sustainability Officer to reinforce sustainability leadership and details efforts to support a transition in its packaging portfolio. The company aims to capitalize on higher-margin categories like healthcare and premium coffee while expanding into dairy and liquid applications for further growth. With a focus on innovative fiber-based products like AmFiber, Amcor aims to enhance organic growth and shareholder returns, positioning itself as a sustainability champion known for delivering essential food and medicine through innovative packaging.

The paragraph outlines Amcor's commitment to sustainability, market leadership, organic growth, and strong financial performance. Focusing on reducing food and packaging waste, the company aims to be a preferred sustainability partner. Amcor leverages its global scale and diverse solutions to position itself as a critical supply partner. The vision includes driving profitable, volume-based organic growth and ensuring a compelling financial profile with consistent shareholder value creation. Recent efforts are beginning to show positive results, as evidenced by early improvements in Q1 volume performance.

The paragraph outlines Amcor's Q1 financial performance for fiscal 2025, highlighting a positive start with increased customer demand across various markets, leading to the third consecutive quarter of volume growth. Overall volumes rose by 2%, despite a 2% decline in North American beverage and healthcare sectors. Other business areas saw a 4% increase compared to the previous year. However, sales were negatively affected by a 3% price/mix impact due to ongoing destocking in high-margin healthcare categories. Adjusted earnings per share met expectations, growing 5% on a constant currency basis to $0.162 per share. Michael Casamento presents these results and the company's positive outlook.

The paragraph reports a 3% growth in adjusted EBIT and a 50 basis point increase in adjusted EBIT margin to 10.9%, driven by effective cost management. In the Flexible segment, Q1 volumes rose by 3% year-over-year due to broad-based growth, despite a 1% net sales decline due to an unfavorable price/mix, mainly from reduced healthcare sales. Ongoing destocking in the North American and European healthcare markets impacted volumes by 2%, but is expected to end by late 2024. The Flexibles portfolio saw solid 5% volume growth, supported by demand in North America, Europe, Asia Pacific, and Latin America. Growth in product categories like meat, dairy, and ready meals was noted, while healthcare showed modest improvement, but pharma volumes fell by low-double digits. Adjusted EBIT for the quarter increased to $329 million, reflecting a 3% growth.

The paragraph discusses the financial performance of a company's Rigid Packaging segment. It highlights a quarter of margin expansion, with adjusted EBIT margins rising to 12.9%. Despite a 4% decline in overall volumes, the segment saw earnings growth driven by cost management and productivity improvements. North American beverage volumes declined, partly due to soft consumer demand and temporary plant closures caused by Hurricane Helene. Latin American volumes decreased due to weaker demand in Argentina and Colombia, offset by growth in Mexico and the Caribbean. The Specialty Containers business experienced growth in dairy and nutrition but faced challenges in healthcare due to destocking. Overall, the segment achieved an adjusted EBIT of $62 million, with a margin increase to 7.7%.

The paragraph details Amcor's decision to sell its 50% stake in the Bericap North America closures business for $122 million to reduce debt, citing differing views on capital requirements with its joint venture partner. Despite exiting this joint venture, Amcor remains active in the closures category and emphasizes disciplined capital allocation. During the first quarter, Amcor experienced increased cash usage due to higher CapEx for sustainability and growth projects and elevated raw material inventories. These factors, coupled with stronger euro rates, led to unexpected higher leverage. Amcor anticipates reducing leverage and exiting fiscal 2025 with a leverage ratio of 3x or lower. The company returned $180 million to shareholders via dividends and increased the quarterly dividend per share by 2%. Amcor reaffirms its fiscal 2025 guidance based on a solid start to the year.

In fiscal 2025, the company expects adjusted earnings per share (EPS) to be between $0.72 and $0.76, representing a 3% to 8% constant currency growth. The guidance includes a 4% EPS reduction due to normalized incentive compensation, with underlying business growth expected in the high single to low double digits. Volume is projected to increase in the low to mid single digits, and interest expenses will be $290 million to $305 million, with a tax rate of 19% to 20%. The second quarter adjusted EPS is expected to match the first quarter, with 45% of earnings in the first half and 55% in the second half, peaking in the fourth quarter. The company anticipates strong adjusted free cash flow of $900 million to $1 billion, aiming to reduce leverage to 3x or lower. The overall start to fiscal 2025 is positive, with optimism about future growth opportunities.

The paragraph is from a company earnings call where the speaker is making closing remarks before taking questions. They express satisfaction with the company's performance and optimism about future growth opportunities. The speaker mentions strategic actions taken to boost volume growth and enhance shareholder returns, noting improved customer demand and financial momentum. They reaffirm financial guidance for fiscal 2025. During the Q&A session, Ghansham Panjabi from Baird asks Peter Konieczny (referred to as PK) about his plans for organic growth in low-growth markets and potential portfolio changes. Konieczny acknowledges the importance of improving organic volume growth and hints at areas where they might focus efforts.

The paragraph discusses two main focus areas for improving business operations. First, maintaining basic service quality to ensure ease of business for customers, with potential for improvement. Second, expanding Amcor's commercial excellence program, "Value Plus," from focusing on mix and margins to also include organic volume growth and innovation. The company aims to leverage its successful product portfolio globally, particularly in Flexibles, and better utilize its innovation center network for continued customer engagement.

The paragraph discusses the focus on various categories for future growth, particularly protein, while acknowledging some setbacks in healthcare. The speaker expresses confidence in the current portfolio, especially in Flexibles and Rigid Packaging, and doesn't foresee a need for immediate changes. The subsequent Q&A session features John Purtell, who inquires about Q1 volume growth. Peter Konieczny responds by expressing satisfaction with the volume growth, noting a 2% overall increase, with a stronger 4% growth in the portfolio excluding healthcare and North American beverage. Flexibles volumes are confirmed to have increased by 3%, consistent with the previous quarter.

In the paragraph, the speaker discusses the performance of the Flexibles segment, which is up 3%, despite healthcare being a slight constraint. The non-healthcare part of the portfolio is up 5%. Within healthcare, the medical subcategory has returned to growth in the first quarter of 2025, as the destocking phase has ended. However, the pharma subcategory continues to experience destocking, which started later than medical, and is expected to resolve by the end of the second quarter. The speaker is optimistic about volume improvements in the second quarter. George Staphos from Bank of America asks about the performance of newer products like AmLite, AmPrima, and AmFiber, inquiring about their growth and significance to the overall portfolio.

In this paragraph, Peter Konieczny from Amcor discusses the company's approach to packaging waste reduction and compliance with European regulations. He emphasizes Amcor's support for regulations that promote sustainability and circularity to reduce plastic waste in the environment. Konieczny highlights the development of sustainable and recyclable product platforms like AmFiber and AmPrima in response to these regulations. He also notes that fiber is an advantageous packaging material as it is already recyclable at scale, unlike plastic, which still needs infrastructure investment to achieve the same level of recyclability.

The paragraph discusses the challenges and opportunities associated with using fiber as a packaging material. Fiber, being porous, has limited applications in primary packaging due to the need for barrier properties to protect food products. However, it is considered a responsible packaging option where applicable. The company has developed AmFiber, a performance paper product with enhanced barrier properties, and AmPrima, a recyclable plastic-based product, both of which are gaining market traction. The fiber substrate is growing from a smaller base, and there are future growth opportunities in sustainable packaging. The conversation then shifts to James Wilson from Jarden Australia inquiring about the unwinding of a joint venture with Bericap, asking about the strategic reasons and the impact on Rigid’s future earnings.

In the paragraph, Peter Konieczny explains the strategic decision to divest from a joint venture in the closures business, despite the company's continued interest in that space. The decision arose from disagreements with the joint venture partner regarding future business development and required capital investment. Konieczny highlights that the company's capital allocation model focuses on achieving better returns in shorter periods, which influenced their decision to reallocate resources to more promising opportunities. Michael Casamento is introduced to discuss the earnings implications further.

The paragraph discusses the financial impact of a joint venture divestment by Amcor, expected to close at the end of December. This will affect FY2025 revenue and EBIT by half of its annual figures, approximately $190 million revenue and $19 million EBIT, both related to the Rigid Packaging segment. Net income, after minority interests, is about $8 million annually, with half impacting FY2025. The divestment proceeds will help reduce net debt, leading to interest benefits, so the overall impact on net income is minor. Peter Konieczny appreciates the amicable relationship with joint venture partners. Additionally, Michael Roxland questions Amcor’s annual margin improvement expectations, suggesting that a leaner cost structure might mean the company could achieve greater gains in the near term.

In the paragraph, Michael Casamento discusses Amcor's financial margin improvement strategy, highlighting that historical consistency of a 20 to 30 basis point algorithm despite fluctuations over time. He explains that the company's ability to manage costs and drive efficiency enables it to maintain this margin improvement, influenced by factors such as raw material prices and volume changes. He also notes the potential for increased margins over the next year or two and mentions that new product innovations and sustainability efforts contribute differently to margins. Peter Konieczny responds to Daniel Kang's question about Amcor's focus on dairy and liquid products, suggesting there's an opportunity for growth in these categories.

The paragraph discusses the company's strong market position in North America for dairy and liquid packaging solutions, with mid-single-digit growth recently observed in these categories. Dairy includes products like cheese and yogurt, while liquids encompass packaging for pumpable foods such as sauces and pureed foods. The company's strategy involves leveraging its successful North American products across global markets, focusing on product leverage as a short-term priority before introducing additional innovations. The company has substantial annual revenues of $800 million to $1 billion in each category and is optimistic about opportunities for growth and revenue creation.

In the paragraph, Samuel Seow from Citi questions why the company's net debt has increased to 3.5x from 3.3x in the previous year despite growing volumes and earnings. Michael Casamento explains that the higher leverage is due to unexpected spikes in euro spot FX rates at the end of the September quarter and increased inventory levels of raw materials. The inventory buildup was prompted by strong demand signals and a desire to avoid missing customer opportunities, amid some supply chain disruptions, including port strikes and impacts from the Middle East. Casamento notes these factors led to higher leverage than anticipated in Q1.

The paragraph discusses a company's financial strategy and projections. The company is taking a conservative approach to ensure they have the right inventory and raw materials to meet increased demand, which has resulted in leverage being higher than desired. They plan to reduce leverage through the year, aided by proceeds from the Bericap disposal expected in December. They expect to see leverage improvements starting in Q2 and aim for leverage to be 3x or below by June 2025. Additionally, there's a focus on establishing a new target for stronger organic growth, moving beyond the historical low single-digit topline growth, particularly as volumes in Flexibles are still below pre-COVID levels. Brook Campbell-Crawford from Barrenjoey asked about the company's targets and expectations for medium-term topline growth, seeking details beyond the immediate future. Peter Konieczny acknowledged the complexity of the questions but did not yet provide an answer.

The speaker is cautious about providing specific targets for future performance but is optimistic about surpassing pre-COVID expectations. While acknowledging that current volume levels haven't fully recovered to pre-COVID levels, they highlight the complexity of the situation across different categories. Some areas are at full capacity, while others have room for growth. The focus is on selling existing open capacity rather than investing in new capacity, but they are open to investment where opportunities arise. Overall, they feel positive about growth initiatives and set a consistent growth target for the organization.

The paragraph is a transcript from a Q&A session discussing a company's financials and restructuring efforts. Michael Casamento explains a $13 million impact on adjusted EBITDA due to restructuring costs aimed at offsetting earnings lost from the sale of the Russian business. He outlines the progress of a cost-saving program involving plant closures and restructures, which is expected to be largely complete by the end of 2024, yielding significant annualized benefits. Nathan Reilly from UBS asks about the company's underlying volume growth of 4% in core markets like the U.S. and Europe, considering fluctuating consumer demand, and Peter Konieczny agrees with Reilly's assessment of solid growth.

The paragraph discusses the company's outlook, emphasizing that consumer spending is expected to remain flat or decline slightly, consistent with previous statements. Improvement is noted in customer performance, partly due to better balance between price and volume, as well as the conclusion of destocking, except in specific categories like healthcare and North American beverages. The company is cautiously optimistic about gaining market share, noting slight progress after the first quarter, and is reserving judgment until further data from Q2 becomes available.

In the paragraph, George Staphos from Bank of America asks Peter Konieczny about two unrelated topics. The first question concerns the company's efforts to improve innovation and speed to market despite having volume growth in line with or better than other consumer packaging markets. Konieczny responds by acknowledging these efforts, although he doesn't specify a trigger for the focus on innovation. In the second question, Staphos asks about the expected profit and volume growth for Rigid Packaging. Konieczny highlights that Rigid Packaging has returned to earnings growth since the beginning of the calendar year, attributing this to the team's ability to adjust cost structures and capacities to improve profitability.

The paragraph discusses the company's anticipation for market improvement to boost profits and sales, which largely depends on consumer behavior in the discretionary categories they serve, such as isotonics and ready-to-drink teas. Despite decreases in inflation, consumers are still hesitant due to high prices, impacting volumes and, consequently, financial results. The company is focusing on innovation and maintains its status as a leader in this area, supported by positive customer feedback. They have made significant investments in innovation centers worldwide, including one in China, and aim to continue enhancing their capabilities.

In the paragraph, a company executive discusses their recent expansion efforts, including the opening of a new location in Ghent, Belgium, and the importance of product leverage and innovation through a process called Catalyst. By taking successful products to new markets with existing demand, they aim for growth. The executive also reaffirms confidence in the company's performance and expresses optimism about meeting the full-year guidance. The call concludes with a note of appreciation for participants.

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