Packaging maker Amcor is looking to accelerate growth by expanding in emerging markets, where it can achieve sales growth of between 10 and 15 per cent without making any new takeovers.
Amcor also said on Thursday that it expected earnings in 2012 to be substantially higher than in 2011 as a result of improvements to its operations and higher than expected benefits arising from recent acquisitions.
Amcor acquired Alcan Packaging for $A2.3 billion in August 2009 and bought US plastic packaging business Ball Plastics for $US280 million ($A273.58 million) in June 2010.
Earnings growth over the next two years would be driven by the operational improvements and acquisition benefits and were not dependent upon improvement in global economic conditions.
Amcor said much of its activities were in “defensive” sectors such as food, healthcare and tobacco packaging, which were less volatile in times of economic uncertainty.
Amcor chief executive Ken MacKenzie told shareholders at the company’s annual general meeting that in the 2013 financial year, when it would be receiving the full benefits from its acquisitions and operational improvements, it would have more cash to accelerate revenue and earnings growth.
Mr MacKenzie said growth would be based upon product innovation and expansion in emerging markets.
“We’re currently experiencing 10 to 15 per cent revenue growth organically (in emerging markets),” Mr MacKenzie told reporters.
“Now, there is the opportunity to grow faster than that through acquisitions as well.”
Amcor classifies Latin America, Eastern Europe and Asia as emerging markets.
Seventeen per cent of existing company revenue is generated in emerging markets.
Of that, 50 per cent of sales were in Latin America, 25 per cent in Eastern Europe and 25 per cent in the Asia Pacific region.
Mr MacKenzie said Amcor had just bought a tobacco packaging business in Argentina that had existing sales of about $US16 million ($A15.68 million).
“This acquisition is small in absolute terms, but it is a great example of an opportunity that enables us to broaden the customer value proposition by establishing a local presence in a fast-growing market,” he said.
Mr MacKenzie said Amcor had a growth execution pipeline that assessed segment and geographical opportunities.
“We’ve identified all the areas that we want to target for both organic and acquisitive growth.
“In each of those areas where we have targeted acquisitive growth, we’ve identified who the targets are and we’ve built ourselves an acquisition pipeline.”
Amcor said overall operations in the first quarter of the financial year had had a solid start and met company expectations.
Amcor’s flexible packaging business, consisting of food, healthcare and tobacco packaging and which represents about half of group sales, was experiencing higher raw material costs but these were being passed on in full to customers.
In August, Amcor reported a net profit of $356.7 million for the 12 months to June 30, up 95 per cent from $183 million one year earlier.
Shares in Amcor gained 10 cents, or 1.4 per cent, to $7.03.
