The article begins with the introduction of a conference call for Amcor's Half-Year Results 2025 by the operator, Kate, who hands over the call to Tracey Whitehead, Head of Investor Relations. Tracey, along with CEO Peter Konieczny and CFO Michael Casamento, will discuss Amcor's fiscal 2025 second-quarter earnings. Tracey mentions that the press release and presentation are available on Amcor's website and notes the use of non-GAAP financial measures and forward-looking statements. Reference to Amcor's SEC filings is advised for detailed information. Peter Konieczny thanks participants and outlines three priorities for the quarter: delivering on the base business, completing the merger with Berry Global, and preparing for integration, emphasizing the commitment to safety.

The paragraph discusses the company's strong performance in fiscal '25, achieving low incident rates and significant financial metrics in Q2 as expected. It's the fourth consecutive quarter with volume improvements, marginal sales growth, and increased margins, leading to a 5% rise in EBIT and EPS. Confidence remains high for meeting full-year guidance, supported by the potential benefits from a merger with Berry, which aligns with Amcor's strategy for sustainable growth, focusing on customer service, sustainability, and product mix. The merger is expected to drive organic growth, improve margins, and make Amcor a preferred global packaging partner.

The combined company will benefit from a broader packaging portfolio across consumer goods and healthcare markets, allowing Amcor to focus on higher-value, faster-growing areas. Berry's recent divestitures have improved their product mix and reduced cyclicality. This business combination enhances material science and innovation capabilities, with over 1,500 R&D professionals and $180 million in R&D investment aimed at addressing functionality and sustainability challenges. The merger is expected to generate $650 million in total cost growth and financial synergies, with 40% realized in the first year and full synergies by year three, alongside $280 million in one-time cash benefits from working capital improvements.

The combination is expected to significantly increase cash EPS by over 35% and generate annual cash flow exceeding $3 billion, supporting a strong investment grade balance sheet and enabling further investment in growth and M&A. Steps towards closing the merger are progressing rapidly, with regulatory approvals underway and the Board of Directors finalized. The company is well-prepared for integration, with plans for the first 100 days leveraging their proven playbook. Financial results are strong, with Q2 net sales of $3.2 billion slightly surpassing the previous year, aligned with expectations.

The paragraph discusses the company's performance in the recent quarter, highlighting a 2.3% growth in overall volumes, marking the fourth consecutive quarter of improvement. Despite continued destocking in healthcare and soft demand in the North American Beverage sector, the company achieved a 5% increase in adjusted EBIT and earnings per share, as well as cash generation above the previous year. The Flexibles segment saw a 3% increase in Q2 volumes with net sales growing by 1%, offsetting unfavorable price mix impacts. Destocking in healthcare in North America and Europe was a significant factor but has now largely subsided. The company is confident about its fiscal-year guidance.

In the Flexibles portfolio, volumes increased by 4%, driven by strong demand across various regions, especially in Asia with substantial growth in China and Southeast Asia. While North America and Europe saw mid-single digit volume growth despite healthcare destocking, Latin America's performance was mixed. Product categories like ready meals and premium coffee experienced robust growth, while healthcare recovered but pharma volumes declined due to previous destocking. The company's adjusted EBIT grew by 4% to $322 million, with margins up by 20 basis points to 12.8%, due to higher volumes, cost management, and restructuring benefits. In Rigid Packaging, although net sales slightly decreased due to price mix effects, volumes increased by 1%, marking an improvement for the fourth straight quarter, despite soft demand in North America's beverage sector.

In the reported period, beverage volumes declined mid-single digits but improved by about four percentage points compared to the first quarter. Latin American volumes decreased slightly due to weak demand in Argentina and Colombia, partially offset by growth in other regions like Brazil. Specialty Containers saw strong growth in spirits, wine, and beer, but healthcare volumes fell because of destocking, while closures volumes increased from last year. Earnings improved with a 10% increase in adjusted EBIT to $53 million, and EBIT margin grew by 70 basis points to 7.3%. The company sold its 50% interest in Bericap North America, gaining $122 million, which was used to reduce debt. A net cash outflow of $38 million year-to-date was reported, despite a $350 million cash inflow in the second quarter. This led to a net debt reduction of $375 million from the previous quarter, with leverage improving to 3.3 times. The company expects leverage to decrease through the fiscal year's second half and aims for a leverage ratio of three times or lower by the end of fiscal 2025.

In the first half of fiscal 2025, the company returned about $365 million to shareholders via dividends. They reaffirm their earnings guidance for the year, expecting adjusted earnings between $0.72 and $0.76 per share, reflecting 3% to 8% growth. Despite a potential 4% EPS headwind from normalized incentive compensation, underlying business growth is expected in the mid-single to low double-digit range. Volume increases are projected in the low to mid-single digits, aligning with recent trading performance. Interest guidance is lowered slightly to $290-$300 million due to debt reduction from Bericap sale proceeds, which has a neutral overall EPS impact after considering the loss of $19 million in EBIT. The effective tax rate remains at 19% to 20%.

The paragraph discusses fiscal expectations through 2025, indicating that the second half of the year is projected to contribute 55% to 58% of EPS, with the fourth quarter being the strongest and accounting for 30% or more of the full-year EPS. The company expects strong adjusted free cash flow between $900 million and $1 billion, aiming to reduce leverage to three times or lower by year-end. The business performance is positive, and there's excitement about growth opportunities from a merger with Berry. The merger is progressing smoothly and is expected to close by mid-2025. The company is prepared to take questions, with the first being from Anthony Pettinari of Citi, who inquires about the potential impact of divestitures on synergy targets or timelines.

In the paragraph, Peter Konieczny discusses the strategic process of evaluating the company's portfolio following the combination with Berry. The focus is on portfolio pruning to enhance organic growth and improve margin quality. While they are considering all assets, it's too early to predict specific actions or impacts on synergies. The goal is to create a stronger, faster-growing, and more attractive business. The operator then signals a new question from Keith Chau regarding underlying demand.

In the article, Peter Konieczny discusses the current state of consumer demand and volume expectations. Despite hopes for volume growth following the end of destocking, consumer demand remains relatively flat to slightly down in the second quarter compared to the first quarter. Upon analyzing scanner data and customer reports, it's concluded that consumer demand has slightly weakened. However, the company is satisfied with their volume performance in this environment, noting improvements with Flexibles up by 3% and Rigids up by 1% sequentially from Q1 to Q2.

The article discusses the business's performance over recent quarters, highlighting consecutive volume improvements and the expectation of reduced healthcare destocking moving forward. The speaker believes that destocking is mostly over, with only minor impacts possibly extending into Q3. By 2025, the outlook is for minimal destocking concerns. As healthcare improvements continue, the mix exposure is expected to improve, and the sector is anticipated to return to growth. The speaker also notes that past restocking trends were responses to supply chain disruptions, and current inventory levels have adjusted to a new normal due to economic factors like higher interest costs. Future inventory changes are expected to be seasonal rather than driven by strategic destocking.

In this discussion, Peter Konieczny and Michael Casamento address the performance and forecast of their Flexible Packaging business. Peter confirms that the volume growth in the first half of the year was within the company's guidance range of low to mid-single digits and expects this trend to continue into the second half. Michael highlights that the company's profit performance met expectations and showed good leverage between volume and EBIT improvement despite some negative mix impacts, particularly in healthcare. He also mentions a focus on maintaining margin quality and cost reduction.

The paragraph discusses the company's focus on cost management in the current year in comparison to the previous year, emphasizing their strategy of reintroducing some labor to meet demand without missing opportunities. Last year's strong emphasis on cost-cutting helped mitigate the effects of destocking. This year, while they are still focused on cost, they are facing more challenging comparisons and have had to adjust by adding labor. The company is satisfied with its performance and notes no significant impacts from foreign exchange or incentives. Additionally, an integration planning event with Amcor and Berry's staff was mentioned, highlighting the preparation for a pending acquisition and the efforts to organize for a smooth and efficient integration post-acquisition. Key areas of focus for potential synergies include procurement, general and administrative expenses, and operations.

The paragraph discusses the integration strategies of Amcor and Berry as they plan to merge their businesses. They have established an integration management office to manage various work streams and focus on generating synergies, particularly cost-related ones. They are confident in achieving $650 million in synergies, with $325 million expected from procurement improvements. The combined companies have a total spend of about $13 billion, with $10 billion on raw materials, and they aim for a 3% synergy capture. The speaker emphasizes confidence in these synergy estimates. The operator then announces a question from another participant, Matt Krueger, who wants to discuss raw materials further.

Michael Casamento discusses the impact of raw material and input costs on the business. In the first half of the year, these costs were generally flat, with minimal impact on earnings. Although there were small fluctuations, such as a slight decrease in resin and liquid costs and an increase in aluminum prices, the overall input cost environment remained stable. Looking into the third quarter, he anticipates similar conditions, with flat costs in Asia and Europe and slight increases in North America, maintaining a relatively benign cost environment.

The paragraph discusses how the regional nature of the business minimizes the impact of tariffs, as the company mostly operates within North America and uses local specialty products. Tariff costs are typically passed through to customers, sometimes through agreements based on indices. Peter Konieczny adds that the company has become more regional to mitigate supply chain risks and feels robust against tariffs due to these regional operations and pass-through opportunities. The Operator then introduces a question from Jakob Cakarnis about the health business, mentioning improvements but noting pharma still affects volumes. He inquires about the healthcare exposure following the potential completion of the Berry merger and whether the current momentum boosts confidence in achieving organic sales growth in the combined entity.

Peter Konieczny, a healthcare advocate, discusses the importance of healthcare as a valuable segment in Amcor's portfolio, particularly when combined with Berry's offerings like multi-component delivery devices, which Amcor lacks. Despite recent challenges due to significant destocking, which started later and lasted longer in healthcare, there is optimism for recovery. By early 2024, most categories have moved beyond destocking, with healthcare lagging slightly. The first fiscal quarter saw modest growth in the medical subcategory, while pharma faced continued destocking challenges. However, the second quarter showed improvements in medical and a reduction in pharma destocking. Although some destocking may persist into the third quarter, the situation is improving overall.

The paragraph is part of a conference call where the speaker expresses optimism about the healthcare sector's return to growth and the end of destocking, anticipating a return to historical growth rates of 3-4%. There's excitement about the potential positive impact on profitability. During the Q&A, Mike Roxland from Truist Securities asks about the due diligence process with Berry and any unexpected findings. Peter Konieczny responds that there have been no surprises in the due diligence and that it's business as usual until the deal closes, expected by mid-year. Roxland also inquires about cost strategies to improve profitability, reflecting gradual volume growth in Amcor’s base business.

The paragraph involves a discussion led by Michael Casamento about operational efficiencies and cost management. He highlights the company's focus on optimizing operations, managing labor according to volume needs, adjusting shift patterns, and benefiting from past restructuring programs to counterbalance losses from disposed earnings in Russia. This has resulted in a $7 million benefit in the first half, with expectations of a similar benefit in the second half. The conversation then shifts to John Purtell from Macquarie, who asks about the benefits of Berry globalizing their Rigids business, particularly with regard to growth prospects for closures and dispensing systems.

In the paragraph, Peter Konieczny discusses the strategic benefits of combining Amcor's and Berry's rigid packaging businesses. He highlights that Amcor's $3 billion rigid packaging business, including its North American beverage sector and specialty containers, will merge with Berry's $7 billion containers and closures business. This merger will create a more significant, multi-regional player. While Amcor's strength lies in the North American beverage market, Berry's focus aligns more with Amcor's specialty containers segment. This complementarity is seen as advantageous, particularly for scaling the specialty containers business. Berry does not engage in the North American beverage segment, which differentiates their areas of strength and provides new opportunities for growth for Amcor.

The paragraph discusses Berry's business, highlighting their strong products in the containers sector, which contribute to their healthcare industry exposure through complex delivery systems. The closure side of Berry offers opportunities in dispensing systems and pumps, further complementing their business, especially after divesting from the Bericap joint venture. The speaker expresses excitement about the synergy but hesitates to provide firm growth assumptions for closures and dispensing systems, requesting more time for detailed information. Following this, a question from Keith Chau addresses the company's financial guidance, noting that the first half of the year aligning with initial predictions suggests a heavier reliance on the second half's performance to meet or exceed the guidance range. Michael Casamento responds to this inquiry.

The paragraph discusses the company's financial outlook and performance expectations. It mentions that the company's first-half results were in line with expectations, with modest volume growth and a 5% increase in EPS. The company is confident about the second half, reaffirming its guidance and anticipating low to mid-single-digit volume growth, particularly in Q4, which is the largest earnings quarter. The company also expects improvement in the business mix due to the healthcare sector returning to growth. The guidance remains reaffirmed, and updates will be provided in May.

The speaker expresses confidence and satisfaction with the recent quarter's performance, highlighting improved volume growth and reaffirmed guidance for the second half of the year. They thank the participants and express eagerness to meet some at upcoming conferences. The call is then concluded by the operator.

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