Amcor’s flexible packaging business is set for more growth in China, after the company took full ownership of factories in Beijing and Chengdu.
Unveiling a 15.7 per cent rise in annual profit on Tuesday, Amcor said the flexible business, the company’s biggest, lifted earnings by 10.1 per cent to $683.3 million despite subdued economic conditions in developed markets.
Emerging markets continued to generate strong volume growth, there was modest growth in North America and stable volumes in western Europe and Australasia.
Amcor’s flexibles business in the Asia-Pacific region generated higher earnings, driven by strong volume growth and operating improvements.
In China, sales rose 13 per cent, thanks to the benefits of extra production capacity installed in China.
Amcor grew its business in the healthcare and high barrier film segments and gained market share in the food sector.
Amcor said it had agreed to acquire the stakes of joint-venture shareholders at flexibles plants in Beijing and Chengdu, where, previously, it held stakes of 75 per cent and 40 per cent.
Both transactions were expected to be completed by the end of September 2012.
“These acquisitions provide the business with additional leverage to the growth opportunities being pursued in the north and west of China,” Amcor said.
Business in Thailand, Indonesia, Singapore and India had a solid year, with strong platforms for growth.
Amcor said overall volumes in Australia and New Zealand were flat but earnings improved on the back of cost cuts.
The $238 million acquisition of Australasian flexibles maker Aperio was completed in May, and the integration was proceeding well.
Amcor’s overall net profit for the 12 months to June 30 rose to $412.6 million from $356.7 million in 2010/11, boosted by growth in emerging markets and benefits from acquisitions.
The growth was achieved despite $222.3 million in acquisition and restructuring costs, and a $35 million impact from the high Australian dollar.
Amcor said its solid performance reflected the “defensive” nature of the food, beverage, healthcare and tobacco packaging markets.
“In the current year, it is expected that volumes will again be resilient and that the benefits from recent acquisitions, growth in emerging markets, cost reduction initiatives and continued strong cash focus will combine to deliver another year of higher earnings, expressed in constant currency terms,” chief executive Ken MacKenzie said.
Amcor said its tobacco packaging business had a strong year, and recent factory acquisitions in Mexico and Argentina provided substantial growth opportunities.
Its rigid plastics business lifted earnings by 8.8 per cent to $264.1 million, driven mainly by benefits from the acquisition of Ball Plastics Packaging.
Overall volumes for beverage containers were lower, but sales of diversified products – containers mainly for pharmaceuticals, healthcare products, food and alcohol – were higher.
For the 2012/13 year, earnings for the rigid plastics business overall are expected to be moderately higher.
Shares in Amcor closed six cents weaker at $7.66.