*Amcor shares tumble after lower FY profit forecast (update)
SYDNEY, April 21 AAP - Shares in Amcor Ltd slumped more than seven per cent in morning trade today after the
packaging company forecast a full year net profit below analysts' expectations. Amcor also announced a 12-18 month
restructuring in North America, where it will close a number of facilities and rationalise overhead structures on both
the West Coast and in Canada. It will take a charge of $70-80 million on restructuring. Shares in Amcor dropped 62
cents, or 7.81 per cent, to $7.32 by 1140 AEST, off a los of $7.29. Nearly eight million shares changed hands. Analysts
had forecast a result for the year to June 30, 2004 of about $417 million, but Amcor today said it expected a net profit
of $375 million to $395 million. Shaw Stockbroking head dealer Jamie Spiteri said the falling share price this morning
reflected disappointment with the forecast profit. "I would envisage that one of the reasons of concern is still
(Amcor's) exposure to the higher Australian dollar," Mr Spiteri said. Amcor said the higher Australian dollar
was likely to reduce its full year earnings by more than $40 million. "The 2004 full year result is anticipated to
be in the range of $375 to $395 million and the outlook for the 2005 year is for solid earnings growth, provided the
Australian dollar and global economic conditions remain stable at current levels," Amcor said. The company also
today reported its profit for the nine months to March 31, 2004, was up six per cent on the same period last year, with
the Australian dollar negatively impacting this figure by around $26 million. Amcor managing director Russell Jones said
this year earnings would be flat. However growth opportunities across a number of the businesses and reconfiguration of
certain businesses in the US and Europe, it was expected that from 2005 sustainable double digit earnings growth would
again be achieved, he said. "The results for the nine months to March have been impacted by a number of issues
including poor economic conditions in a number of regions, the translational impact of the appreciating Australian
dollar, some operational performances below expectations and increased costs in some segments of the US PET
market," Mr Jones said. "In response to these factors, targeted actions are now underway in the various
business units. "In the PET business, restructuring of both the West Coast of the US and Canadian operations will
be undertaken involving plant closures and overhead reductions. "Benefits of these actions will begin to flow in
2005 financial year. Amcor said the costs associated with the planned plant closures and restructuring were anticipated
to be around $60 - $70 million before tax, and will be disclosed as a significant item in the profit statement. The
majority of this figure is anticipated to be booked in the 2004 year. Amcor said the ongoing benefit from this program
is anticipated to be around $25 million per annum at the profit before interest, tax and amortisation (PBITA) level.
Amcor's PET Packaging reported PBITA was up 6.7 per cent in local currency terms for the nine months to March.
"For the overall PET business, it is anticipated over the next two years that improved earnings in Europe and Latin
America will be somewhat offset by lower earnings in North America where the impact of price erosion on already
contracted volumes will impact earnings growth," the company said. "However, the program of changes to be
implemented in North America, together with ongoing improvement in other regions will lead to improved returns in the
medium term and ensure satisfactory returns are achieved longer term." Amcor Flexibles achieved an increase in
PBITA in local currency terms for the nine months of 6.7 per cent. However the third quarter result was below
expectations. "In Flexibles there is an ongoing examination of the manufacturing footprint with the likelihood of
plant closures as well as significant organisation change to simplify the business and further reduce costs," Mr
Jones said. Amcor said it was anticipated that this further restructuring will cost $70 - $80 million before tax and
deliver benefits of around $30 million per annum at the PBITA level, with most of this achieved in the 2005 fiscal year.
Amcor also said that as part of the ongoing strategy to look at expansion opportunities, especially in lower cost
regions, Amcor Flexibles is planning to expand into Russia by building a greenfield facility at Novgorod. Amcor
Australasia achieved a 12.8 per cent increase in PBITA for the nine months while Amcor Asia's nine months PBITA was
down 5.8 per cent in local currency terms. AAP
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