Slide 1: Investors Full Year Results Presentation
Investors Full Year Results Presentation August 2006 www.amcor.com
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: Full Year Results Profit Summary
Full Year Results Profit Summary 04/05 05/06 ∆% Positives PBITDA (A$ m) 1,284 1,249 (2.7) • PBITDA 2.7% lower in an environment of PBIT (A$ m) 822 776 (5.6) rapidly rising input costs • Strong cash flow performance PAT (A$ m) 459 406 (11.5) • Good recovery by year end of raw material EPS (c) 52.2 46
Slide 4: The Way Forward
The Way Forward Improve EXECUTION FOCUS shareholder Strong Customer Capital market & market Low cost discipline value positions focused CULTURAL CHANGE • Execution priorities announced in August 2005 – Two to three year program • Significant progress in all areas over the past 12 months Substantial
Slide 5: The Way Forward – Strong Market Positions
The Way Forward – Strong Market Positions EXECUTION FOCUS Customer Strong and Capital market Low cost market discipline positions focused • Flexibles and tobacco packaging in emerging and attractive markets • Custom PET Good Grow Assess: • Select Market segments in Australasia • Segment attractivene
Slide 6: The Way Forward – Strong Market Positions (Fix)
The Way Forward – Strong Market Positions EXECUTION FOCUS Strong market Customer and Low cost Capital FIX market discipline positions focused • Opportunities to substantially improve underperforming businesses: – PET in Mexico – PBIT improvement of more than USD15 million over two years – Fibre in A
Slide 7: The Way Forward – Strong Market Positions (Sell)
The Way Forward – Strong Market Positions EXECUTION FOCUS Strong market Customer and Low cost Capital SELL market discipline positions focused • Asset sales – White Cap Closures – Asian corrugated, sacks and closures – Australasia PET – Review ongoing and further asset sales possible Completed asset
Slide 8: The Way Forward – Strong Market Positions (Close)
The Way Forward – Strong Market Positions EXECUTION FOCUS Customer CLOSE Strong and Capital market Low cost market discipline positions focused • European Flexibles operations: – Closing two plants – Colodense in the UK and Hochheim in Germany – Cash costs of €32 million – Improved earnings of €10 m
Slide 9: The Way Forward – Strong Market Positions (Grow)
The Way Forward – Strong Market Positions EXECUTION FOCUS Customer GROW Strong and Capital market Low cost market discipline positions focused Organic Growth Acquisitions • Custom PET • Tobacco Packaging – New plant for Gatorade in the – Increased investment US in Vision Grande – Specific projects i
Slide 10: The Way Forward – Customer & Market Focused
The Way Forward – Customer & Market Focused EXECUTION FOCUS • Focus is on: Customer Strong and Capital market Low cost market discipline positions focused – Building capability in sales and marketing – Changing culture • Extensive program developed and being “rolled out” across the businesses – Wave
Slide 11: The Way Forward – Lower Costs
The Way Forward – Lower Costs EXECUTION FOCUS Customer • Operational Strong and Capital market Low cost market discipline positions focused – Continuous cost reduction at the plant level – Improved focus and execution discipline – Substantial component of the turnarounds is lowering costs • Procurem
Slide 12: The Way Forward – Capital Discipline
The Way Forward – Capital Discipline EXECUTION FOCUS Capital discipline is managing the cash flow and balance Strong Customer and Capital sheet to deliver optimal performance for shareholders market Low cost market discipline positions focused Growth Base Capital Capital $442 million $70 million Red
Slide 13: The Way Forward – Capital Discipline Targets
The Way Forward – Capital Discipline EXECUTION FOCUS Customer Strong and Capital market Low cost market discipline positions focused Targets for 2006/07 • Base capital expenditure to be around depreciation • Spending on announced growth projects for 2006/07 approximately $130 million • Reduction in
Slide 14: The Way Forward - Culture
The Way Forward - Culture Improve EXECUTION FOCUS Strong Customer Capital shareholder market positions & market focused Low cost discipline value CULTURAL CHANGE • Substantial changes to the leadership team • New culture being developed based around the three key areas of the execution: – Customer a
Slide 15: The Way Forward - Summary
The Way Forward - Summary Improve EXECUTION FOCUS Strong Customer Capital shareholder market positions & market focused Low cost discipline value CULTURAL CHANGE • Excellent progress in all areas • Benefits to be realised over the next 12 to 24 months
Slide 16: Amcor Australasia
Amcor Australasia Earnings & Returns Cash Flow * Sales A$ m 350 % 18 300 16 $A m 056/06 A$ m 04/05 05/06 14 PBITDA 384.2 Fibre 1,331 1,264 250 12 Capital Expenditure (105.2) Flexibles 444 440 200 PBIT 10 Movement in WC 13.5 Rigid 797 857 RoAFE % 150 8 Cash Flow 292.5 TOTAL 2,572 2,561 6 100 4 50 2 0
Slide 17: Fibre performance 05/06
Fibre performance 05/06 Summary Volumes – Corrugated and Cartons • A disappointing result with earnings • Structural substantially lower – Returnable plastic crates (RPC’s) – Lower volumes – Fruit and produce – Operational issues – Manufacturing relocating offshore • Organisational structure change
Slide 18: Fibre Australasia – Improvement Plan Summary
Fibre Australasia – Improvement Plan Summary Actions Deliverables • Close corrugated plant at Box Hill • Low cost position in corrugated • Upgrade other Victorian sites • Low cost position in recycled paper and cartonboard • Close paper plant in Spearwood • Simpler, more efficient business • Restruc
Slide 19: Flexibles and Rigid Packaging 05/06
Flexibles and Rigid Packaging 05/06 Rigid Packaging Flexibles Packaging Beverage cans • Solid year • Volumes up 6% • Recovery of resin increases with • Strong growth in multipack soft drink modest lag market • Market softness in certain segments • Some aggressive competition in New Food cans Zealand
Slide 20: Australasian outlook
Australasian outlook Strategically Earnings • Generally good industry structure • Second half run rate in fibre to across the businesses continue this year • Amcor is number one or two in each – Earnings lower segment • Modest benefits from fibre restructuring in 06/07 • Non fibre business is genera
Slide 21: Amcor PET Packaging
Amcor PET Packaging Earnings & Returns Cash Flow * Volumes USD m 15 % USD m 05/06 Billion Units 04/05 05/06 230 North America 17.5 19.1 PBITDA 337.1 Europe 9.0 8.8 190 Capital Expenditure (153.6) Latin America 7.6 8.3 10 Movement in WC 18.4 TOTAL 34.1 36.1 PBIT 150 Significant Items (6.7) RoAFE CSD/
Slide 22: Energy Costs
Energy Costs Issues Recovery Plan • All costs experienced inflationary • Incorporate energy recovery clauses pressure, however energy was the into future contract language most significant • Implement surcharges for transport • Energy is a key input cost, freight, where appropriate representing over
Slide 23: North America
North America Positives Offsets • Substantial profit improvement • Rising inflationary pressures, especially • Custom volume growth 26% energy costs in the second half ― Continued success with new • Limited short-term ability for inflationary projects cost recovery • Ongoing industry wide capital di
Slide 24: Latin America
Latin America Positives Offsets • Overall volume growth 10% • Earnings substantially lower • Argentina earnings well down • Custom volume growth 37%, reflecting – Export volumes lost strong market position supporting – Inflationary pressures growth in Gatorade • Brazil lower earnings • Ongoing subst
Slide 25: Europe
Europe Positives Offsets • Increased earnings • Substantial under recovery of energy cost increases – Strong second half • Improved operating efficiencies in Western European plants • UK operations delivered another strong result • Sale of the loss-making Poland operation • Continued good performanc
Slide 26: PET Packaging - Summary
PET Packaging - Summary Strategic Operational • Custom PET is an attractive market • Recovery of energy cost increases segment • Improvement in Mexico – Favourable industry structure • Benefits from capital expenditure in – Higher barriers to entry custom PET – Continued good growth • Continued focu
Slide 27: Amcor Flexibles
Amcor Flexibles Cash Flow * Sales * Earnings & Returns * €m 120 % €m 05/06 €m 04/05 05/06 18 118 PBITDA 206.4 Food 957 971 15 Capital Expenditure (90.7) Healthcare 486 523 116 12 Movement in WC 55.4 Tobacco Pack & EE 306 348 PBIT RoAFE 114 Significant Items (11) Other 8 (15) 9 112 Cash Flow 160.1 TO
Slide 28: Flexibles – Summary
Flexibles – Summary Strategic Operational • Healthcare • Earnings growth via: • Attractive market segment • Improvement plans at specific plants • Need to establish global approach to customers and sourcing • Benefits from plant closures • Food • Product development and mix • Processed segment low g
Slide 29: Amcor Sunclipse
Amcor Sunclipse Earnings & Returns Cash Flow * Sales USD m 05/06 USD m 04/05 05/06 USD m 50 19 % PBITDA 58.5 Distribution 718 764 17 40 Capital Expenditure (9.1) Man. Products 209 219 15 30 Movement in WC (7.4) Corrugated 174 174 PBIT 13 RoAFE 11 Cash Flow 42 Eliminations (187) (192) 20 9 TOTAL 914
Slide 30: Amcor Asia
Amcor Asia Earnings & Returns Cash Flow * Sales SGD m 14 % 40 SGD m 05/06 SGD m 04/05 05/06 12 PBITDA 47.9 Tobacco Pack 146 132 30 10 Capital Expenditure 0.7 Flexibles 46 55 8 PBIT RoAFE 20 Movement in WC 0.2 Other 36 28 6 Cash Flow 48.8 TOTAL 228 215 4 10 Growth Capital (68) 2 0 0 04/05 05/06 Sales
Slide 31: Group Financials
Group Financials
Slide 32: Key Results June 2006 – All Operations
Key Results 30 June 2006 – All Operations A$ m (before significants) June 05 June 06 %Change Sales 11,099.6 11,439.3 3.1 % PBITDA 1,283.6 1,249.1 (2.7) % PBIT 821.8 775.7 (5.6) % Borrowing costs (incl PACRS) (218.7) (246.6) (12.8)% PBT 603.1 529.1 (12.3) % Tax and Minorities (144.3) (123.2) 14.6 % P
Slide 33: Significant Items
Significant Items A$ m June 06 Fair value gain from options & dilution 44.5 Profit on sale of tobacco businesses 52.3 Overall gain from Vision Grande transaction 96.8 Asian corrugated loss on sale & impairment (32.1) Closures loss on sale & impairment (34.0) Flexibles Europe restructure & impairment
Slide 34: Significant Items
Significant Items A$ m June 06 Fair value gain from options & dilution 44.5 Profit on sale of tobacco businesses 52.3 Overall gain from Vision Grande transaction 96.8 Asian corrugated loss on sale & impairment (32.1) Closures loss on sale & impairment (34.0) Flexibles Europe restructure & impairment
Slide 35: Group Cash Flow - All Operations
Group Cash Flow - All Operations June 05 June 06 PBITDA 1,283.6 1,249.1 Interest (207.2) (239.6) Tax (115.5) (79.1) Cash significant items (51.8) (26.0) Base capital expenditure (503.7) (441.8) Movement in working capital 4.7 123.2 Other (64.3) (63.5) Operating cash flow 345.8 522.3 Dividends (294.3
Slide 36: Capital Structure
Capital Structure A$ m June 05 June 06 (1) Equity 3,381 3,572 Convertible Securities 898 464 Net Debt 2,574 2,661 Balance Sheet Capital 6,853 6,697 OBS items* 525 470 Total Capital 7,378 7,167 Gearing on Balance Sheet 50.7% 46.7% Gearing + OBS items* 54.2% 50.2% Interest cover: PBITDA** 5.9x 5.1x (1
Slide 37: Financial Summary
Financial Summary • Resilient underlying operating PAT result • Interest expense and cover ratio will improve • Tax rate maintained and sustainable • Cash flow has improved • Working capital performance better • Capital expenditure discipline in place • Gearing at conservative end of target range •
Slide 38: Summary
Summary • Key issues understood • Execution plan established – Strategic – Operational • Benefits from execution to take time • Stability of earnings and cash flow • Short term negative issues to continue – Input costs • Modest expectations for current year • Substantial upside in earnings and retur
Slide 39: Full Year Results
Full Year Results August 2006 www.amcor.com