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Amcor (AMCR) Q2 Earnings & Revenues Top Estimates, Up Y/Y
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Amcor Plc (AMCR - Free Report) reported second-quarter fiscal 2023 (ended Dec 31, 2022) adjusted earnings per share of 19 cents, which beat the Zacks Consensus Estimate of 18 cents. The bottom line improved 6% from the prior-year quarter.
Including special items, the company reported net earnings per share of 31 cents, up 107% from the prior-year quarter’s 15 cents.
Total revenues improved 4% year over year to $3,642 million for the reported quarter and beat the Zacks Consensus Estimate of $3,635 million. An unfavorable currency impact of 5% was offset by a price increase of around 8%. Net sales on a comparable constant-currency basis were 1% higher than last year quarter, reflecting price/mix benefits of approximately 3%, partly offset by approximately 2% lower volumes.
The cost of sales increased 4% year over year to $2,980 million. The gross profit rose 3% year over year to $662 million. The gross margin was 18.2% for the quarter under review, reflecting a contraction of 20 basis points from the prior-year quarter.
SG&A expenses decreased 1.7% year on year to $298 million. The adjusted operating income was $399 million for the quarter, up 3% from $388 million in the prior-year quarter. The adjusted operating margin was 11% compared with 11.1% in the prior-year quarter.
Segment Performances
The Flexibles segment’s net sales increased 4% year over year to $2,812 million. This included an unfavorable currency impact of 6% and price increases of 7%. Adjusted operating profit was $353 million, marking a 5% increase from the prior-year quarter’s figure.
The Rigid Packaging segment’s net sales were $830 million in the quarter under review, 4% higher than the prior-year quarter. Price increase of 10% was offset by an unfavorable impact of 1% related to movements in foreign exchange rates. Adjusted EBIT increased 6% year over year to $57 million.
Financial Updates
As of the end of second-quarter fiscal 2023, Amcor had $837 million of cash and cash equivalents compared with $775 million at fiscal 2022-end. The company generated $145 million of cash from operating activities in the first half of fiscal 2023 compared with $323 million in the prior-year comparable period. AMCR reported an adjusted free cash outflow of $61 million in the first half of fiscal 2023 against an inflow of $105 million in the comparable period of the last year. As of Dec 31, 2022, Amcor’s net debt totaled $6.07 billion.
Amcor repurchased 3 million shares for $40 million in the first half of fiscal 2023. AMCR targeted total share repurchases of $500 million for fiscal 2023.
In the first half of fiscal 2023, the company returned approximately $400 million to shareholders through cash dividends and share repurchases. The company’s board of directors hiked the quarterly cash dividend to 12.25 cents per share from the previous payout of 12 cents per share.
AMCR completed the sale of its Russia business on Dec 23, 2022, and received cash proceeds of around $365 million. This was in addition to approximately $65 million of cash on hand in Russia, which was repatriated upon the closing of the deal. Approximately $120 million of the cash received is expected to be invested in a range of additional cost-saving initiatives. The company expects to use the remaining amount in repurchasing shares up to $100 million and to repay debt.
In January 2023, Amcor announced that it entered an agreement to acquire Shanghai-based MDK., which is a leading provider of flexible packaging for the medical device segment. MDK has an annual sales of approximately $50 million. MDK's coating capabilities, medical paper-based packaging products and customer base will complement Amcor's portfolio, while strengthening its leadership position in the China and broader Asia Pacific medical packaging segment. The acquisition is expected to close by the end of the third quarter of fiscal 2023.
Fiscal 2023 Guidance
Amcor expects adjusted comparable constant currency EPS growth of 3-8% for fiscal 2023. The guidance factors in an 5-10% expected growth from the underlying business performance and a 2% gain from share repurchases. This will be partly offset by a negative impact of 4% related to higher interest expenses and tax. A stronger dollar will impact earnings by 4%. AMCR also anticipates a negative impact of 3% associated with the sale of its three plants in Russia.
Adjusted EPS is expected to be 77-81 cents. The company projects an adjusted free cash flow of $1-$1.1 billion.
Share Price Performance
Image Source: Zacks Investment Research
Over the past year, Amcor’s shares have gained 1% compared with the industry’s 1.3% growth.
O-I Glass has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for OI’s 2022 earnings is pegged at $2.51 per share. This indicates a 15.7% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has been unchanged in the past 60 days. OI’s shares gained 66.9% in the last year.
Tenaris has an average trailing four-quarter earnings surprise of 20.9%. The Zacks Consensus Estimate for TS’ 2022 earnings is pegged at $4.38 per share. This indicates a 134.2% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has moved north by 2.1% in the past 60 days. Its shares gained 36.9% in the last year.
The Zacks Consensus Estimate for Deere & Company’s fiscal 2023 earnings per share is pegged at $28.01, suggesting an increase of 19.6% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 2.7% upward in the last 60 days. DE has a trailing four-quarter average earnings surprise of 7.1%. Its shares gained 11.7% in the last year.
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Amcor (AMCR) Q2 Earnings & Revenues Top Estimates, Up Y/Y
Amcor Plc (AMCR - Free Report) reported second-quarter fiscal 2023 (ended Dec 31, 2022) adjusted earnings per share of 19 cents, which beat the Zacks Consensus Estimate of 18 cents. The bottom line improved 6% from the prior-year quarter.
Including special items, the company reported net earnings per share of 31 cents, up 107% from the prior-year quarter’s 15 cents.
Total revenues improved 4% year over year to $3,642 million for the reported quarter and beat the Zacks Consensus Estimate of $3,635 million. An unfavorable currency impact of 5% was offset by a price increase of around 8%. Net sales on a comparable constant-currency basis were 1% higher than last year quarter, reflecting price/mix benefits of approximately 3%, partly offset by approximately 2% lower volumes.
Amcor PLC Price, Consensus and EPS Surprise
Amcor PLC price-consensus-eps-surprise-chart | Amcor PLC Quote
Costs and Margins
The cost of sales increased 4% year over year to $2,980 million. The gross profit rose 3% year over year to $662 million. The gross margin was 18.2% for the quarter under review, reflecting a contraction of 20 basis points from the prior-year quarter.
SG&A expenses decreased 1.7% year on year to $298 million. The adjusted operating income was $399 million for the quarter, up 3% from $388 million in the prior-year quarter. The adjusted operating margin was 11% compared with 11.1% in the prior-year quarter.
Segment Performances
The Flexibles segment’s net sales increased 4% year over year to $2,812 million. This included an unfavorable currency impact of 6% and price increases of 7%. Adjusted operating profit was $353 million, marking a 5% increase from the prior-year quarter’s figure.
The Rigid Packaging segment’s net sales were $830 million in the quarter under review, 4% higher than the prior-year quarter. Price increase of 10% was offset by an unfavorable impact of 1% related to movements in foreign exchange rates. Adjusted EBIT increased 6% year over year to $57 million.
Financial Updates
As of the end of second-quarter fiscal 2023, Amcor had $837 million of cash and cash equivalents compared with $775 million at fiscal 2022-end. The company generated $145 million of cash from operating activities in the first half of fiscal 2023 compared with $323 million in the prior-year comparable period. AMCR reported an adjusted free cash outflow of $61 million in the first half of fiscal 2023 against an inflow of $105 million in the comparable period of the last year. As of Dec 31, 2022, Amcor’s net debt totaled $6.07 billion.
Amcor repurchased 3 million shares for $40 million in the first half of fiscal 2023. AMCR targeted total share repurchases of $500 million for fiscal 2023.
In the first half of fiscal 2023, the company returned approximately $400 million to shareholders through cash dividends and share repurchases. The company’s board of directors hiked the quarterly cash dividend to 12.25 cents per share from the previous payout of 12 cents per share.
AMCR completed the sale of its Russia business on Dec 23, 2022, and received cash proceeds of around $365 million. This was in addition to approximately $65 million of cash on hand in Russia, which was repatriated upon the closing of the deal. Approximately $120 million of the cash received is expected to be invested in a range of additional cost-saving initiatives. The company expects to use the remaining amount in repurchasing shares up to $100 million and to repay debt.
In January 2023, Amcor announced that it entered an agreement to acquire Shanghai-based MDK., which is a leading provider of flexible packaging for the medical device segment. MDK has an annual sales of approximately $50 million. MDK's coating capabilities, medical paper-based packaging products and customer base will complement Amcor's portfolio, while strengthening its leadership position in the China and broader Asia Pacific medical packaging segment. The acquisition is expected to close by the end of the third quarter of fiscal 2023.
Fiscal 2023 Guidance
Amcor expects adjusted comparable constant currency EPS growth of 3-8% for fiscal 2023. The guidance factors in an 5-10% expected growth from the underlying business performance and a 2% gain from share repurchases. This will be partly offset by a negative impact of 4% related to higher interest expenses and tax. A stronger dollar will impact earnings by 4%. AMCR also anticipates a negative impact of 3% associated with the sale of its three plants in Russia.
Adjusted EPS is expected to be 77-81 cents. The company projects an adjusted free cash flow of $1-$1.1 billion.
Share Price Performance
Image Source: Zacks Investment Research
Over the past year, Amcor’s shares have gained 1% compared with the industry’s 1.3% growth.
Zacks Rank & Stocks to Consider
Amcor currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are O-I Glass, Inc (OI - Free Report) , Tenaris (TS - Free Report) , and Deere & Company (DE - Free Report) . OI and TS sport a Zacks Rank #1 (Strong Buy) at present, and DE has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
O-I Glass has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for OI’s 2022 earnings is pegged at $2.51 per share. This indicates a 15.7% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has been unchanged in the past 60 days. OI’s shares gained 66.9% in the last year.
Tenaris has an average trailing four-quarter earnings surprise of 20.9%. The Zacks Consensus Estimate for TS’ 2022 earnings is pegged at $4.38 per share. This indicates a 134.2% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has moved north by 2.1% in the past 60 days. Its shares gained 36.9% in the last year.
The Zacks Consensus Estimate for Deere & Company’s fiscal 2023 earnings per share is pegged at $28.01, suggesting an increase of 19.6% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 2.7% upward in the last 60 days. DE has a trailing four-quarter average earnings surprise of 7.1%. Its shares gained 11.7% in the last year.