Amcor Plc · NYSE:AMCR
Amcor — Debt Investor Presentation (August 2005)
31 slides from Amcor's debt investor presentation, August 2005
Slide 1: Full Year 2004/05 Results Overview
FULL YEAR 2004/05 RESULTS OVERVIEW August 2005
Slide 2: 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 generally be ide
Slide 3: 2004/2005 Year
2004/2005 Year • Profit after tax up 1% to $391 million • Operating cash flow of $980 million • Significant items a loss of $269.8 million • Number of adverse impacts – Substantial cost increases – Slowing economic conditions Overall – Some projects behind schedule • Difficult year – Trade Practices
Slide 4: Amcor PET
Amcor PET US$ 225 20 % • Sales growth 20% 200 18 16 • Overall volume growth 5% 175 150 14 • Custom volume growth 6% 12 PBITA 125 10 RoAFI 100 8 75 Regional Volumes 6 50 4 Latin America, 25 2 22% Europe, 27% 0 0 02/03 03/04 04/05 Sales US$m 1,897 2,275 2,733 PBITA US$m 184.4 190.3 195.4 A.F.I. US$m 1
Slide 5: North America
North America • Solid year • Earnings slightly lower due to unrecovered cost increases and price concessions • Custom volume growth 10% and CSD/Water volumes flat • Restructuring program was successfully completed • Ongoing restructuring required – Loss of volume predominately in Canada – Three plan
Slide 6: Latin America
Latin America • Strong year with volumes up 23% • Earnings in Brazil and Argentina increased substantially • In Mexico the integration of Arca remains behind schedule • Outlook – Continued solid growth – Focus on execution in Mexico © Amcor Ltd 2005
Slide 7: Europe
Europe • Very disappointing year with volumes down 4% and earnings substantially lower • Cool summer • German volumes and earnings well down • Poor operating performances in Turkey (now closed) and Poland • Change of management • Outlook – Modest volume growth – Focus on execution © Amcor Ltd 2005
Slide 8: PET – Key Focus
PET – Key Focus • Continuing focus on cost reductions to offset margin erosion • Improving the operating performance in Mexico and Continental Europe • Capital expenditure to focus on higher returning businesses in Latin America and custom beverage © Amcor Ltd 2005
Slide 9: Amcor Flexibles
Amcor Flexibles • Sales up 7%, mainly due € 120 20 % to raw material cost 18 100 increases 16 80 14 • Returns remained steady 12 at 9.6% PBITA 60 10 RoAFI 8 • Substantial raw material 40 6 cost increases largely 4 recovered 20 2 • Significant cost 0 0 02/03 03/04 04/05 reductions achieved Sales €m 1
Slide 10: Segment Performance
Segment Performance • Processed food – Improvement driven through restructuring – Write down of the carrying value of some plants – The new plant in Russia on schedule • Fresh food – Solid performance particularly in the produce and bread markets – Volumes and forward loading is good • Health – Reas
Slide 11: Summary
Summary • Operationally the business is better positioned than 12 months ago, however: – European economy remains a concern – Raw material prices are likely to increase over the next six months – Processed Foods business has improved but still well below expectations – Fresh, Health and Americas per
Slide 12: Amcor Australasia
Amcor Australasia $m 350 20 % 18 • Solid year 300 16 • Returns 16.9% 250 14 12 • Very strong first half but 200 PBITA 10 slower second half RoAFI % 150 8 100 6 4 50 2 0 0 02/03 03/04 04/05 Sales $M 2,456 2,538 2,572 PBITA $M 282.9 316.5 316.8 A.F.I. $M 1,816 1,832 1,876 PBITA/AFI % 15.6 17.3 16.9 Em
Slide 13: Amcor Australasia business review
Amcor Australasia business review Fibre - corrugated • Performance over the past 12 months disappointing • Impacted by substantial management changes • Volumes lower: – Drought, retailer supply chain strategies, customers moving volumes offshore Fibre – cartons • Converting – Volumes down slightly i
Slide 14: Australasian Outlook
Australasian Outlook • Economy more subdued than 12 months ago • Good opportunities exist for improvement in all aspects of the fibre division, but these will take time • Market and supply chain dynamics are changing • Overall there is a solid base of earnings, however the second half run rate is co
Slide 15: Key Results
Key Results June June June 05 AUDm 03 04 AGAAP AIFRS Sales 10,710 10,406 11,100 11,100 EBITDA 1,329 1,286 1,298 1,293 EBITA/EBIT(1) 860 831 838 836 NPAT 379 387 391 470 Significant items (70) (95) (59) (59) Asset impairments - - (211) (207) NPAT (after significants) 309 292 121 204 © Amcor Ltd 2005
Slide 16: Additional Impairments and Restructuring
Additional Impairments and Restructuring • Review of all BG’s, CGU’s and plants • Goodwill at CGU level remains supportable • Drill down identified underperforming sectors/plants • $171m “impairment”, $89m accelerated depreciation = $260 m • Net of tax overall cost $211 mill © Amcor Ltd 2005
Slide 17: Significant Items
Significant Items AUDm – 2004/05 Cash Non-cash Total Restructuring - PET business integration and restructure 21 13 34 - Flexibles market sector rationalisation 34 - 34 - Tax effect (Flexibles) (9) 59 Asset impairments 26 234 260 - Tax effect (49) 211 Total - Pre-tax 81 247 328 - Tax (58) 270 © Amco
Slide 18: Cash Flow from Operations
Cash Flow from Operations 961 980 1000 Compound CFO growth 18.8% pa 945 Compound PAT growth 12.4% pa 800 694 $m 600 526 415 379 387 391 400 281 218 238 200 0 99/00 00/01 01/02 02/03 03/04 04/05 PAT = Profit After Tax (and PACRs) CFO = Cash Flow from Operations (= PAT plus Depreciation & Amortisation
Slide 19: Capital Structure with OBS Financing
Capital Structure with OBS Financing $ mill Jun 03 Jun 04 Jun 05 Equity & PACRS 4,636 4,708 4,363 Net Debt* 0 1/ 02 2,297 2,689 2,548 6,933 7,397 6,911 OBS financings** 850 662 783 Total Capital 7,783 8,059 7,694 Gearing (including OBS) 40.4% 41.6% 43.3% Interest cover: PBITA*** 3.7x 4.1x 3.9x Inter
Slide 20: Impact of AIFRS
Impact of AIFRS • Goodwill • Share based payments • Pension plan obligations • Leases and securitisations • Restoration provisions, start up costs, grants • Tax effect accounting • Equity: debt classifications • No overall economic or cash flow impact © Amcor Ltd 2005
Slide 21: AIFRS Impact on Balance Sheet June 05
AIFRS Impact on Balance Sheet June 05 Reconciliation AGAAP Adjustments AIFRS Current Assets 3,337 158 (1) 3,495 Non Current Assets 6,562 0 1/ 02 383 (2) 6,945 9,899 541 10,440 (3) Current Liabilities 3,094 162 3,256 Non Current Liabilities 2,442 751 (4) 3,193 5,536 913 6,449 Equity 4,363 (372) 3,991
Slide 22: Financial Summary
Financial Summary • Cash flow remains strong • Tax rate position maintained • Recent working capital pressure absorbed & managed • Matching currency of assets & liabilities • Debt maturity profile remains strong • Financial flexibility in capital structure • Commitment to capital management © Amcor
Slide 23: 2004/2005 Summary
2004/2005 Summary • The 2004/2005 year was particularly difficult • The second half and more specifically the fourth quarter run rate was poor • This run rate continues into the first half of the 2005/ 2006 year • Some key determinants for earnings in 2005/2006 remain uncertain and volatile • Not po
Slide 24: The Way Forward
The Way Forward Returns PBITA/AFI Sales % 25 12 $ billion 10 • For the past five years 20 8 growth has had priority 15 12.2 12.9 12.8 11.1 11.1 10.9 6 over returns 10 5 4 • Returns are the priority 2 0 99/00 00/01 01/02 02/03 03/04 04/05 0 • Good opportunities exist to deliver more value from our pl
Slide 25: The Way Forward
The Way Forward Improve EXECUTION FOCUS shareholder Customer Strong market and Low cost Capital value market discipline positions focused © Amcor Ltd 2005
Slide 26: The Way Forward – Strong Market Positions
The Way Forward – Strong Market Positions EXECUTION FOCUS Strong market positions Good Assess: Grow • Segment • Review ongoing attractiveness –Potential sale • Competitive Fix proceeds between position Poor $0.5 to $1.0 billion Sell Close –Asset write downs $210 million –Further possible restructuri
Slide 27: The Way Forward – Customer & Market Focused
The Way Forward – Customer & Market Focused • Need to develop unique insights via a deeper understanding of customer EXECUTION FOCUS and market needs Customer and market focused – Differentiated offer – First mover advantage • Need to upgrade commercial Better execution of capability customer and ma
Slide 28: The Way Forward – Lower Costs
The Way Forward – Lower Costs • Continue to pursue business group initiatives EXECUTION FOCUS – Operating efficiencies – Capital upgrades Low cost – Manufacturing footprint • Drive new opportunities from global leverage Need strong cost reduction – Sharing best practice culture to offset non – Overh
Slide 29: The Way Forward – Capital Discipline
The Way Forward – Capital Discipline • Manage investment spending by: – Having a more focussed portfolio – Better understanding the market EXECUTION FOCUS segments and customer needs Capital – Continuing to reduce costs discipline • Focus on returns – PBIT to Average Funds Employed – Cash to shareho
Slide 30: The Way Forward – Cultural Change
The Way Forward – Cultural Change EXECUTION FOCUS Improve shareholder Strong market Customer and market Low cost Capital value positions discipline focused CULTURAL CHANGE • Improvement in execution will require cultural change – Dynamic – Lean – “One” company • Building our people is as important a
Slide 31: www.amcor.com
www.amcor.com