Slide 1: Amcor
AMCOR WWW.amcor.com
Slide 2: Investor Presentation JPMorgan Conference October 2004
Investor Presentation JPMorgan Conference October 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: Investor Presentation
Investor Presentation • Review of 2003/04 results • Review of key issues • Group outlook © 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: Cash Flow from Operations
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 8: Cash Flow Summary
Cash Flow Summary $m Inflows Outflows $(117) Work Capital (decrease) $325 Maintenance Capex $137 Net Borrowing Costs PBITDA $101 Tax $1286 $225 Dividends (net) & PACRS $120 Other Debt* $266 $761 Acquisitions / Growth Capex *Net of refinancing lease on glass plant © Amcor Ltd 2004
Slide 9: 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 10: 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 11: 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 12: Operational key issues
Operational key issues • PET – Growth in custom containers – Latin America – Europe – North America • Resin pricing and volumes in Flexibles Europe • Summary of the progress in the restructuring of the PET and Flexibles operations • Operational leverage to improving economic conditions • Update on t
Slide 13: Custom growth by region
Custom growth by region Europe/Asia 11% growth Latin America 36% growth US 17% growth 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Units (millions) 02/03 Volume 03/04 Volume Growth Overall custom volume growth 22% © Amcor Ltd 2004
Slide 14: Latin America
Latin America • Strong performance with earnings up 35% • Alcoa integration and benefits ahead of expectations • Improving performance in Brazil • Arca acquisition behind expectations – Higher customer volumes – Integration issues • Excellent results from remaining countries © Amcor Ltd 2004
Slide 15: Europe
Europe • Very strong performance with earnings up 42% (in US dollar terms) and 20% (in Euro terms) • Hot summer in 2003 benefited all facilities – 2004 summer obviously cooler • Beer volumes up substantially to more than 120 million units – Further strong growth this year • Strong growth in refillab
Slide 16: North American - overview
North American - overview • Overall volumes up 13.6% • Earnings down 13% – Impact of strong Canadian dollar and pricing pressure – Over US$10 million – Non recovery of higher costs – Healthcare, energy, insurances – Pricing pressure in the CSD and water markets © Amcor Ltd 2004
Slide 17: North American cost reduction program
North American cost reduction program • Combining the Canadian and US management and organisational structures • Two small facilities in the US north east have been closed • Two more plants are to close – One in the north east and one on the west coast • Extensive review of overhead costs • Restruct
Slide 18: North American pricing initiative
North American pricing initiative • Need to introduce pricing that better reflects value and cost across the US – Encouraging signs from large customers • Further plant closures depend upon the outcome of these discussions • Capital will not be invested unless returns are satisfactory © Amcor Ltd 20
Slide 19: Operational key issues
Operational key issues • PET • Flexibles – Rexam Healthcare – Processed food market – Raw material prices • Summary of the progress in the restructuring of the PET and Flexibles operations • Operational leverage to improving economic conditions • Update on the Australasian business © Amcor Ltd 2004
Slide 20: Healthcare division
Healthcare division • Consists of medical, pharmaceutical and personal care • Successful integration of Rexam Healthcare acquisition • Good volume growth across most product segments • The Americas performing ahead of expectations • Good profit potential and excellent growth prospects © Amcor Ltd 20
Slide 21: Flexibles - Processed food
Flexibles - Processed food • Consists of confectionery, snack food, biscuits, coffee, pet food and tobacco • Some of these markets experienced soft demand • Sales were down around 7% – Mainly confectionery, snack food and biscuits • Operating issues at seven plants (out of 19) – Management changes a
Slide 22: Base Materials Purchasing Trend
Base Materials Purchasing Trend Jan 01- Sep 04 Index Index on ave price/tons movement 120 110 100 90 80 70 60 50 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Representative Basket of A
Slide 23: Significant items
Significant items • Significant items estimated at A$100 million in total – A$75 million taken in 2003/2004 • Expected full year savings around A$45 million – Headcount reduction of around 640 people © Amcor Ltd 2004
Slide 24: Operational key issues
Operational key issues • PET • Flexibles • Summary of the progress in the restructuring of the PET and Flexibles operations • Operational leverage to improving economic conditions • Update on the Australasian business © Amcor Ltd 2004
Slide 25: Restructuring at Flexibles and PET
Restructuring at Flexibles and PET • Eight plants or facilities closed – Six PET, two Flexibles • Headcount reduction approximately 900 • Cost of program in PET and Flexibles $160 million – Benefits of around $70 million – $90 million taken as a significant item 2003/2004 year The restructuring is p
Slide 26: Operational key issues
Operational key issues • PET • Flexibles • Summary of the progress in the restructuring of the PET and Flexibles operations • Operational leverage to improving economic conditions • Update on the Australasian business © Amcor Ltd 2004
Slide 27: Impact of improving economic conditions
Impact of improving economic conditions • Amcor Sunclipse is seeing the benefits – Successful pass through of higher linerboard prices • Amcor Asia continuing improvement • Some modest signs of economic recovery in Europe © Amcor Ltd 2004
Slide 28: Operational key issues
Operational key issues • PET • Flexibles • Summary of the progress in the restructuring of the PET and Flexibles operations • Operational leverage to improving economic conditions • Update on the Australasian business © Amcor Ltd 2004
Slide 29: Amcor Australasia
Amcor Australasia • Excellent earnings growth and returns – Returns 17.3% • Strong position in a broad range of product segments • Focus of continual improvement that has been consistent over a number of years • Ongoing growth opportunities – Glass wine bottles Economy continues to show steady growt
Slide 30: Sales per employees
Sales per employees Sales per Employee $’000’s $265K +30% $345K EMPLOYEES 8600 2700 SALES 8400 2600 8200 2500 8000 7800 2400 EMPLOYEES SALES 7600 2300 7400 2200 7200 2100 7000 6800 2000 99/00 00/01 01/02 02/03 03/04 © Amcor Ltd 2004
Slide 31: 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 32: 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 33: 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 34: Amcor
AMCOR WWW.amcor.com