Amcor Ltd. plans to close Canadian PET packaging plants in Vancouver, Calgary and Montreal in a bid to overhaul poorly performing businesses and improve profit margin.
While Ken MacKenzie, Amcor Ltd. chief executive, said the company will not divest the PET Packaging division, Melbourne-based Amcor Ltd. halved its profit in 2004-05 and is looking to improve performance. Results for the year ended June 30 - released Aug. 25 - marked an overall profit of A$173.2 million (US$132 million), down from A$345.7 million (US$263 million) in the previous fiscal year.
An Amcor spokeswoman said the plants still are operating and closing dates have not been scheduled yet.
The firm's annual report said Amcor PET Packaging had a ``satisfactory year,'' with earnings before income tax and amortization up 2.7 percent to US$195.4 million. It said business in Latin America was strong, with profit well up over last year, but North American and European profits were down. Cost-cutting programs delivered some benefits, but increases were offset by inflationary pressures in costs that were absorbed by the business and price concessions on longer-term contracts that are likely to continue.
``The business has been notified of the loss of around 800 million containers in volume at the end of the current contract in January 2006. The supply of this volume is predominantly from the plants in Canada. After examining options, the decision has been made to close three small Canadian plants,'' the annual report said.
In Europe, operations in Turkey already have closed and a Polish plant is undergoing ``substantial change.'' A shareholder presentation estimates Amcor could recoup as much as A$1 billion from future sale proceeds.
Meantime, Amcor has released its first commercial application of panelless, ribless, hot-fill PET bottles in the U.S. market.
Amcor PET Packaging's North American operations have designed and will manufacture the PowerFlex PET bottle for Tradewinds Tea initially, but an Australian spokeswoman said the product could be manufactured globally, if required. The PowerFlex bottle takes hot-fill of 182Ã¸-192Ã¸ F.
Christy Lichtendahl, Tradewinds Beverage Company marketing manager, said a key benefit for Tradewinds is being able to fill the bottle on its existing glass bottle line.
``We are able to run both the pressure-sensitive body label and neck shrink label on existing equipment without modification. To alter the filler, we use a set of change parts and we've added a second capper to accommodate the new polypropylene closure.''
Lichtendahl said Tradewinds is optimistic the PET bottle will allow it to sell its product to venues that were not glass-friendly traditionally, such as pools, schools, golf courses, stadiums and theaters.