Slide 1: Amcor
AMCOR WWW.amcor.comM
Slide 2: Ord Minnett Presentation September 2004
Ord Minnett Presentation September 2004
Slide 3: Disclaimer
Disclaimer Disclaimer • This presentation contains forward-looking statements that involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, Amcor. Forward-looking statements can gener
Slide 4: Presentation
Presentation • Review of 2003/04 results • Review by businesses • Financials • Group outlook • General discussion © Amcor Ltd 2004
Slide 5: Full Year Results
Full Year Results* $m 02/03 03/04 Operating revenue 10,710 10,406 -2.8% Net profit (after goodwill) 379.1 387.4 +2.2% EPS (before goodwill) 61.7 59.4 -3.7% EPS (after goodwill) 45.3 44.7 -1.3% Dividend (cents) 30.0 32.0 +6.7% * Pre significant items © Amcor Ltd 2004
Slide 6: Earnings Per Share Growth
Earnings Per Share Growth Post Goodwill Amortisation Pre Goodwill Amortisation th 6.6% % grow th 10.3 pound grow Co m mpound Co 42.1 45.4 44.7 Cents / share 50.0 37.6 Cents / share 75.0 62.0 59.4 34.5 40.0 44.7 50.3 30.0 50.0 40.2 20.0 25.0 10.0 0.0 0.0 01 02 03 00 04 00 01 02 03 04 20 20 20 20 20 2
Slide 7: Review of the year
Review of the year • Results negatively impacted by: – $34 million currency translation profit after tax – Price and cost issues in the North American PET market – Operational underperformance in Flexibles – Difficult economic conditions in Europe – Other currency impacts of around $25 million PBITA
Slide 8: Review of the year
Review of the year • Positives – Steady profit reflects defensive nature of the portfolio of businesses – Strong performances in Amcor Australasia, Amcor Rentsch & Closures and Amcor Asia – Excellent integration of the Rexam Healthcare acquisition – Strong operating cash flow of $891 million © Amcor
Slide 9: Focus for the next two years
Focus for the next two years • Improving returns on the existing assets – Focus on manufacturing and overhead costs – Selling prices reflecting the cost of capital – Continued development of product leadership – Strict management of capital • Growing the cash flow, which is available for – Dividend
Slide 10: Improving returns as pace of change is reduced
Improving returns as pace of change is reduced • Amcor Australasia – Relatively stable business portfolio – Continuous improvement mindset • Amcor Rentsch & Closures – Driving quality and service – Continuous operating improvements • Amcor Sunclipse – Diligent approach to lowering costs – Consistent
Slide 11: Outcomes
Outcomes • Eight plants or facilities closed – Six PET, two Flexibles • Headcount reduction approximately 900 • Cost of program in PET and Flexibles $160 million – Announced in April – Benefits of around $70 million – $90 million taken as a significant item in 2003/2004 year © Amcor Ltd 2004
Slide 12: Amcor PET
Amcor PET 225 18 US$ 200 16 % 175 14 150 12 PBITA 125 10 RoAFI 100 8 75 6 50 4 25 2 0 0 02/03 03/04 Sales US$m 1,897 2,275 PBITA US$m 184.4 190.3 A.F.I. US$m 1,747 1,901 PBITA/AFI % 10.6 10.0 Employees 5,601 6,191 © Amcor Ltd 2004
Slide 13: Year-over-Year Volume Growth 17%
Year-over-Year Volume Growth 17% 02/03 27.7 billion units globally Custom Containers 16% CSD/Water Containers 84% 03/04 32.4 billion units globally Custom Containers 17% CSD/Water Containers 83% © Amcor Ltd 2004
Slide 14: PET – key points
PET – key points • Strong businesses in Europe and Latin America • Need to improve returns in North America – Plant closures and overhead reductions – Improved pricing – Capital management • Significant items overall are around A$60 million with benefits of around A$25 million • For 2004/2005 earnin
Slide 15: Amcor Australasia
Amcor Australasia $m 350 18 % 16 300 14 250 12 PBITA 200 10 RoAFI % 150 8 6 100 4 50 2 0 0 02/03 03/04 Sales $M 2,456 2,538 PBITA $M 282.9 316.5 A.F.I. $M 1,816 1,832 PBITA/AFI % 15.6 17.3 Employee’s 7,113 6,756 © Amcor Ltd 2004
Slide 16: Amcor Flexibles
Amcor Flexibles % € 120 12 100 10 80 8 PBITA 60 6 RoAFI 40 4 20 2 0 0 02/03 03/04 Sales €m 1,219 1,336 PBITA €m 74.2 78.2 A.F.I. €m 679 819 PBITA/AFI % 11.0 9.6 Employees 6,766 7,606 © Amcor Ltd 2004
Slide 17: Amcor Sunclipse
Amcor Sunclipse 60 18 US$ 50 16 % 14 40 12 PBITA 10 30 RoAFI 8 20 6 4 10 2 0 0 02/03 03/04 Sales $m 761 822 PBITA $m 49.7 40.9 A.F.I. $m 333 323 PBITA/AFI % 15.0 12.6 Employees 2,367 2,204 © Amcor Ltd 2004
Slide 18: Amcor Rentsch and Closures
Amcor Rentsch and Closures € 90 14 % 75 12 60 10 PBITA 8 45 RoAFI 6 30 4 15 2 0 0 02/03 03/04 Sales $m 734 604 PBITA $m 47.1 60.0 A.F.I. $m 571 431 PBITA/AFI % 8.2 13.9 Employees 3,279 3,140 © Amcor Ltd 2004
Slide 19: Amcor Asia
Amcor Asia 20 Sing $ 40 18 % 16 30 14 12 PBITA 10 RoAFI 20 8 6 10 4 2 0 0 02/03 03/04 Sales $m 271 304 PBITA $m 33.0 37.2 A.F.I. $m 299 282 PBITA/AFI % 11.0 13.2 Employees 2,797 2,833 © Amcor Ltd 2004
Slide 20: Key Results
Key Results $ mill (before significant items) Jun 03 Jun 04 Sales 10,710 10,406 -2.8% PBITDA 1,329 1,286 -3.2% PBITA 860 831 -3.4% PBIT 722 704 -2.5% PBT (pre PACRS) 575 571 -0.7% PAT (pre PACRS) 431 440 +2.0% PBT (post PACRS) 523 518 -0.9% PAT (post PACRS) 379 387 +2.1% EPS (post PACRS: cents) 45.3
Slide 21: Sensitivity to Currency
Sensitivity to Currency $A vs $USD $A vs EUR $A vs $SING .5861 to .7098 . 5592 to .5964 1.0283 to 1.2205 21% 7% 19% Amcor full year sensitivity Impact at PAT level in 03/04 • USD 1 cent =$1.8m p.a • EUR 1 cent=$2.0m p.a • SGD 1 cent=<$0.5m p.a FY 04 Impact on PAT $34 mill FY 04 Impact of SHF $65 mil
Slide 22: Cash Flow from Operations
Cash Flow from Operations 1000 Compound CFO growth 21.7% pa 945 891 Compound PAT growth 15.4% pa 800 694 600 526 $m 415 379 387 400 281 218 238 200 0 1999/00 2000/01 2001/02 2002/03 2003/04 Full Year Full Year Full Year Full Year* Full Year* PAT = Profit After Tax (and PACRs) CFO = Cash Flow from Op
Slide 23: Cash Flow from Operations per share
Cash Flow from Operations 1000 Compound CFO growth per share 12.3%% pa 1.4 1.13 1.2 800 1.05 1.03 945 1 0.84 891 600 $ share 0.8 $m 0.66 694 0.6 400 526 0.4 415 200 0.2 0 0 1999/00 2000/01 2001/02 2002/03 2003/04 Full Year Full Year Full Year Full Year* Full Year* CFO = Cash Flow from Operations (=
Slide 24: Cash Flow Summary
Cash Flow Summary $m Inflows Outflows $(117) Work Capital (decrease) $325 Sustaining Capex $137 Net Borrowing Costs PBITDA $101 Tax $1286 $225 Dividends (net) & PACRS $120 Other Debt* $266 $761 Growth Capex/Acq/Disposals *Net of refinancing lease on glass plant © Amcor Ltd 2004
Slide 25: Working Capital Performance
Working Capital Performance Working capital at period end Average p.a. Working capital/sales* Net Acquisitions 1300 16 133 410 78 1000 44 14 $m % 700 12 400 10 98/99 99/00 00/01 01/02 02/03 03/04 Full Year Full Year Full Year Full Year Full Year Full Year *After (i.e. net of) factoring and securitiz
Slide 26: Capital Structure with OBS Financing
Capital Structure with OBS Financing $ mill Jun 02 Jun 03 Jun 04 Equity & PACRS 4,567 4,636 4,708 Net Debt* (257) 0 1/ 02 2,297 2,689 4,310 6,933 7,397 OBS financings** 413 850 662 Total Capital 4,723 7,783 8,059 Gearing (3%) 40.4% 41.6% Interest cover: PBITA*** 3.7x 3.7x 4.1x Interest cover: PBITDA
Slide 27: Interest and Borrowing Costs
Interest and Borrowing Costs Weighted Average Cost Jun 03 Jun 04 PACRS, PRIDES & Convertibles* 7.9% 7.9 % Other Debt Facilities - US 4.5% 4.2 % - European 3.2% 4.2 % - Australia 5.0% 5.3 % - New Zealand 5.7% 6.5 % - Asia 4.5% 4.6 % Weighted Average Interest Rate Cost 5.0% 5.3 % Other Borrowing Costs
Slide 28: Dividend
Dividend • Final dividend 16c (32c FY - up 6.7% on pcp) • Final dividend franked 40% • No DRP discount • DRP satisfied via on market purchase of shares • DRP no longer dilutive to eps • Payout ratio 54+% on pre-goodwill basis • Dividend increases aligned to profit growth © Amcor Ltd 2004
Slide 29: Amcor today
Amcor today • The packaging industry has and will continue to consolidate as expected • Strong positions developed in chosen markets • Enables leveraging to obtain improving returns – Scale, technology and customer relationships • Decentralised organisational structure • Returns above cost of capita
Slide 30: Growth and yield are possible
Growth and yield are possible • The targets for the next phase of development are: – Grow earnings off the existing asset base – Targeting 20% earnings growth over the next two years – Generate sufficient cash to both – Increase the dividends in line with earnings – Reinvest in the business for both
Slide 31: Summary
Summary Reshaping & growing Optimizing 1998 2004 2006 Australian Leading Global Paper & Global Packaging Packaging Packaging Company Company Packaging Industry Leverage position to Company Consolidator improve returns Delivering good growth in both earnings and dividends © Amcor Ltd 2004
Slide 32: Amcor
AMCOR WWW.amcor.comM