Amcor Plc · NYSE:AMCR
Amcor — Macquarie Australia Conference 2018
47 slides from Amcor's conference presentation, May 2, 2018
Slide 1: Macquarie Conference Presentation
For personal use only 2 May 2018 MACQUARIE CONFERENCE PRESENTATION Amcor CEO, Mr Ron Delia will today deliver a presentation at the Macquarie Australia Conference in Sydney. The key points to be covered are: • Amcor is uniquely positioned and high performing • FY18 update • Amcor has a clear strateg
Slide 2: Macquarie Australia Conference
For personal use only Macquarie Australia Conference 2-3 May 2018 Ron Delia Managing Director & CEO
Slide 3: Disclaimer
Disclaimer Forward looking statements undue reliance on such forward looking These forward looking statements Non-IFRS information For personal use only This presentation contains forward- statements. speak only as of the date of this Certain non-IFRS financial information looking statements that in
Slide 4: Safety
Safety Lost-time frequency rate Recordable-case frequency rate For personal use only 1.80 1.6 8 7.4 1.60 Acquisition 7 1.40 1.2 impact 6 5.1 Acquisition 1.20 0.9 0.9 0.9 5 4.1 impact 1.00 0.8 4.0 0.8 0.7 4 3.4 0.80 0.6 0.6 2.6 0.5 3 2.4 2.5 0.60 2.0 2.0 2.0 0.40 2 0.20 1 0.00 0 Global Reduce hand El
Slide 5: Agenda for today
Agenda for today For personal use only 1 Context: Uniquely positioned and high performing 2 FY18 Update 3 Future: Clear strategy and substantial growth potential 4
Slide 6: Amcor is a global leader in packaging
Amcor is a global leader in packaging For personal use only • Founded in Australia in 1860s • USD 9bn sales, AUD 16bn market cap • Global leader: flexible and rigid plastic consumer packaging • ~200 plants, ~35,000 employees, 43 countries Global Scale Innovation Sustainability Strong Reach Player Le
Slide 7: Focused portfolio of high value packaging for consumer staples
Focused portfolio of high value packaging for consumer staples For personal use only Sales by product segment Sales by end market High value add products 4% 5% 13% 14% 4% 38% 53% 14% 30% 25% Food Flexible packaging Rigid Plastic containers Beverage Specialty Cartons Healthcare Closures Home & Person
Slide 8: Geographic diversification, global reach and local presence
Geographic diversification, global reach AND local presence For personal use only Sales by Sales by emerging and Emerging market sales geographic region developed markets by country Asia Pacific 15% Emerging Europe, markets Middle East & 30% Africa 41% Developed Americas 44% markets 70% Europe, Midd
Slide 9: Leadership positions and scale in key segments
Leadership positions and scale in key segments For personal use only Flexibles Rigid Plastics EMEA 1° North America 1° Flexibles 1° Asia Pacific Rigid Plastics 1° Latin America Flexibles Latin America 1° Specialty Cartons, 1° Global Flexibles Europe, Flexibles Flexibles Asia Rigid Plastics Specialty
Slide 10: Margin improvement and strong return on capital
Margin improvement and strong return on capital For personal use only 12.0% 11.1% 11.2% 10.9% EBIT Margins 9.1% Returns on funds 8.7% employed (%) 21.6 8.1% 20.3 20.4 7.7% 19.4 18.6 7.1% 6.8% 15.9 14.1 11.8 12.4 10.5 Estimated pre-tax WACC 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014
Slide 11: Consistent cash generation and strong earnings growth
Consistent cash generation and strong earnings growth Free Cash Flow after capex and dividends (USD millions) For personal use only 268 343 298 311 245 Reported EPS (USD cents per share) 57.3 56.2 55.8 57.7 60.6 FY13 FY14 FY15 FY16 FY17 Constant currency EPS growth +9.2% +6.4% +11.3% +10.1% 10
Slide 12: Strong total returns for shareholders
Strong total returns for shareholders For personal use only 303.9% 152.1% 70.8% Notes: Citi, IRESS, FactSet. Market data as at 13 April 2018. Global packaging index represents a weighted index comprising: Aptar Group, Ball Corp, Bemis, Berry Plastics, Crown Holdings, Graphic Packaging, Huhtamäki, Ma
Slide 13: Agenda for today
Agenda for today For personal use only Context: Uniquely positioned and high performing 2 FY18 Update Future: Clear strategy and substantial growth potential 12
Slide 14: FY18 Update
FY18 Update • Strong underlying performance in several parts of the Company For personal use only • Controlling the controllables - Amcor-wide focus • Excellent cost performance: SG&A and plant cost reductions, procurement savings and restructuring benefits • Pricing actions: raw material cost recov
Slide 15: Agenda for today
Agenda for today For personal use only Context: Uniquely positioned and high performing FY18 Update 3 Future: Clear strategy and substantial growth potential 14
Slide 16: Amcor strategy
Amcor strategy For personal use only Our Businesses FOCUSED PORTFOLIO FLEXIBLE RIGID PLASTIC SPECIALTY PACKAGING CONTAINERS CLOSURES CARTONS Our Differentiated Capabilities THE AMCOR WAY Our Aspiration Significant growth opportunities THE leading global packaging company WINNING FOR KEY STAKEHOLDERS
Slide 17: Amcor strategy – business portfolio
Amcor strategy – business portfolio For personal use only Our businesses FOCUSED PORTFOLIO FLEXIBLE RIGID PLASTIC SPECIALTY PACKAGING CONTAINERS CLOSURES CARTONS Strong businesses Multiple paths to winning • Primary packaging • Market leadership • Consumer packaging • Scale positions • Good industry
Slide 18: Growth opportunities in each segment
Growth opportunities in each segment All Amcor Businesses: Focus segments: For personal use only Organic and acquisition opportunities Substantial growth potential Rigid Plastics Flexibles Flexibles Specialty Americas Asia containers Closures Amcor sales USD 1bn USD 1bn USD 750m USD 400m FLEXIBLE RI
Slide 19: Amcor strategy – differentiated capabilities
Amcor strategy – differentiated capabilities For personal use only Our businesses FOCUSED PORTFOLIO FLEXIBLE RIGID PLASTIC SPECIALTY PACKAGING CONTAINERS CLOSURES CARTONS Our differentiated capabilities THE AMCOR WAY Significant growth opportunities 18
Slide 20: Differentiated capabilities - The Amcor Way
Differentiated capabilities - The Amcor Way For personal use only The keys to winning in the packaging industry and: • Competitive advantage • Leverage and scale benefits • Additional growth and productivity • Team alignment 19
Slide 21: Amcor strategy
Amcor strategy For personal use only Our Businesses FOCUSED PORTFOLIO FLEXIBLE RIGID PLASTIC SPECIALTY PACKAGING CONTAINERS CLOSURES CARTONS Our Differentiated Capabilities THE AMCOR WAY Our Aspiration Significant growth opportunities THE leading global packaging company WINNING FOR KEY STAKEHOLDERS
Slide 22: Amcor strategy – winning for investors
Amcor strategy For personal use only Our businesses FOCUSED PORTFOLIO FLEXIBLE RIGID PLASTIC SPECIALTY PACKAGING CONTAINERS CLOSURES CARTONS Our differentiated capabilities THE AMCOR WAY Our Aspiration Significant Investors growth benefit fromopportunities Amcor’s consistent growth and superior retu
Slide 23: Amcor shareholder value creation model
Amcor shareholder value creation model For personal use only Dividend Growth in line with (~ USD 500m) EPS ~ 4% yield Total shareholder Strong, Capital Organic EPS growth value of 10-15% defensive cash expenditure of ~ 3-4% per annum with flow (~ USD 400m) low volatility Acquisitions EPS growth of ~
Slide 24: Value creation starts with strong cash flow
Value creation starts with strong cash flow For personal use only Strong, Organic EPS growth defensive cash of ~ 3-4% flow 23
Slide 25: Value creation through dividend yield
Value creation through dividend yield For personal use only Dividend Growth in line with (~ USD 500m) EPS ~ 4% yield Strong, Organic EPS growth defensive cash of ~ 3-4% flow 24
Slide 26: Value creation through organic growth
Value creation through organic growth For personal use only Dividend Growth in line with (~ USD 500m) EPS ~ 4% yield Strong, Capital Organic EPS growth defensive cash expenditure of ~ 3-4% flow (~ USD 400m) Multiple sources of organic growth • Commercial and cost productivity • Customer relationship
Slide 27: Customer relationships – winning with big and small brands
Customer relationships – winning with big and small brands For personal use only Flexibles EMEA Rigid Plastics North America Beverage (FY17 sales) Regional Business Unit >4,000 CAGR 14% ~25 ~10 # of customers €m sales per annum >30m 10m-30m <10m FY13 FY17 USD sales % of Flexibles EMEA sales ~35% ~15
Slide 28: Innovation - effective and highly regarded capabilities
Innovation - effective and highly regarded capabilities For personal use only Product safety Differentiation Total cost of Sustainable ownership Packaging Vento AmLite Family 100% PCR Formpack Fortis container Ultra/Dessiflex Coffee Food & Beverages Home care Pharma Medical Global sales reached >USD
Slide 29: Sustainability - leading by example
Sustainability - leading by example For personal use only We are the first packaging company pledging to develop all packaging to be recyclable or reusable by 2025 Develop all our packaging to be recyclable or reusable by 2025 Significantly increase our use of recycled materials in our packaging Wor
Slide 30: Emerging markets - packaging spend growth
Emerging markets - packaging spend growth For personal use only Low income Inflection point • Young and growing population • Young and growing population • Very low incomes • Rising incomes Canada • Wet markets, unpackaged goods • Urbanisation, modernising retail channels, packaged goods Australia U
Slide 31: Value creation through acquisitions and/or buy-backs
Value creation through acquisitions and/or buy-backs For personal use only Dividend Growth in line with (~ USD 500m) EPS ~ 4% yield Strong, Capital Organic EPS growth defensive cash expenditure of ~ 3-4% flow (~ USD 400m) Acquisitions EPS growth of ~ 2-7% and/or buy-backs (~ USD 200-300m) 30
Slide 32: Track record of growth by acquisition in all businesses
Track record of growth by acquisition in all businesses 700 For personal use only Rigid Plastics 600 Flexibles Americas Flexibles Europe USD million spend 500 Specialty Cartons Flexibles Asia Pacific 400 300 200 100 0 2012 2013 2014 2015 2016 2017 Total spend (USDm) (1) 273 191 104 58 655 323 Number
Slide 33: Summary
Summary For personal use only 1 Context: Uniquely positioned and high performing 2 FY18 Update 3 Future: Clear strategy and substantial growth potential 32
Slide 34: Macquarie Australia Conference
For personal use only Macquarie Australia Conference 2-3 May 2018 Ron Delia Managing Director & CEO
Slide 35: Global and regional sustainability partnerships
Global and regional sustainability partnerships Global Initiatives Regional Initiatives For personal use only Addressing global issues through Identifying and implementing practical, sustainability partnerships with … efficient recycling options with … CEFLEX European collaboration, Ellen MacArthur
Slide 36: Flexibles raw material cost inflation
Flexibles raw material cost inflation For personal use only Resin (ex PET) Aluminium Liquids Asia Europe Americas Ingredient 1 Ingredient 2 H118 December 17 vs June 17 +8% +5% +13% +10% +17% +36% FY18 Cumulative since June 17 +17% +11% +15% +20% +26% +67% YTD to March 18 Data reflects LDPE (Asia, EU
Slide 37: Amcor Presentation transcript – Ron Delia, CEO
Amcor Presentation transcript – Ron Delia, CEO Macquarie Australia Conference – 2 May 2018 Good morning ladies and gentlemen. For personal use only I am pleased to have the opportunity to present to you this morning and thank you for joining us. Slide 3 - Safety As we do with all meetings at Amcor I
Slide 38: For personal use only
Amcor has been around for more than 150 years - our origins date back to the 1860’s. We started as an Australian forest products and paper company but we’ve transformed over the last several decades into a truly global packaging leader. In fact, while we are proud of our Australian roots, today Amco
Slide 39: For personal use only
There is one other important aspect of who we are that I’d like to point out today and that is our industry leadership positions. We believe that industry structure, and the ability to achieve leadership positions in the segments we play in, is a key success factor in the packaging industry. For per
Slide 40: For personal use only
Amcor’s total return over the 10-year period shown here has been in excess of 300% and is well ahead of both of those comparative groups. Slide 12 – Agenda for today With that background and overview as context, let me now take the opportunity to update you For personal use only on some key points r
Slide 41: For personal use only
This year’s earnings impact from these raw material increases will be the most significant in any year since FY11 and so it is clearly an unusual period. Second, in the Rigid Plastics segment, while we have maintained share, North American beverage and closure volumes have remained weak. Those of yo
Slide 42: For personal use only
Slide 16 – Amcor strategy – business portfolio We choose to play in product segments that share some important characteristics: • a focus on primary packaging; • packaging primarily for fast-moving consumer products; For personal use only o Why primary consumer packaging? Because that’s where we bel
Slide 43: For personal use only
In our case, the way we get leverage and scale benefits across Amcor is through a set of differentiated capabilities which we call The Amcor Way. Slide 19 – Differentiated capabilities – The Amcor Way Over the years, we have developed a point of view on the keys to winning in the packaging For perso
Slide 44: For personal use only
We believe that with our focused portfolio and differentiated capabilities we are winning for investors when they benefit from Amcor’s cash flow and capital allocation, consistency and high returns. Slide 22 – Amcor shareholder value creation model For personal use only We describe our value proposi
Slide 45: For personal use only
I’ll briefly touch on the remaining three sources of organic growth on the following slides. Slide 26 – Customer relationships – winning with big AND small brands The starting point for organic growth at Amcor is the deep set of customer relationships we have around the world – each year we do more
Slide 46: For personal use only
Sustainability is worth spending a few minutes on as it’s emerging as one of the most important consumer trends around the world and therefore it’s one of the most important opportunities for Amcor to further differentiate itself from our competitors. First, we start with the conviction that packagi
Slide 47: For personal use only
So over the long term, we’d expect evolving consumer needs in areas like food safety, extended shelf life and individual portion packs. This will continue to drive strong growth in packaging consumption across emerging markets. Slide 30 – Value creation through acquisitions and/or buy-backs For pers