Melbourne-based international packaging group Amcor Ltd. says the impact of the global economic slowdown partly explains a 30 percent profit fall for the last six months of 2008.
But despite the slide, the firm still is interested in potential acquisitions around the globe.
An Amcor spokesman did not respond to questions about whether the company is considering making a bid for Constar International Inc., a Philadelphia-based rival that has filed to reorganize under Chapter 11.
Amcor's sales grew 3.8 percent over the half-year to reach US$3.1 billion, compared with US$3.01 billion in the 2007 period.
But net profit fell to US$69.8 million, down from US$99 million for the same period in 2007.
In addition to the market slowdown, Amcor's results were affected by write-downs totaling US$37.9 million linked to the group's restructuring efforts, including disposal of some of its European PET operations as part of plans to shift to lower-cost production markets.
Managing Director Ken MacKenzie described the half-year outcome as a “solid performance in particularly difficult economic circumstances.” PET packaging operations showed an “excellent operating performance” that partially offset the impact of lower sales volumes, MacKenzie said.
“During the [July-September 2008] quarter, there was significant destocking in the supply chain that adversely impacted volumes,” he said.
“Since the end of October, volumes have more closely reflected underlying demand, particularly [for] higher-value-add custom products.”
Economist and packaging analyst Robert Eastment, director of Hobart, Australia-based Edge Pty. Ltd., said once the costs of restructuring flow through Amcor's books, it still has to face the ongoing impact of the worldwide economic crisis.
He said there are some products that could ride out bumpy economic cycles. “There are some that really do survive quite well. But in Amcor's food and grocery markets there are many items that fall under discretionary spending and certainly will be impacted.”
Eastment said the financial crisis is likely to see consumers seek out cheaper alternatives to their regular grocery lines. “There will be a move from manufacturer-branded products to generic products,” he said.
“In the Australian market, any shift in consumption from branded packaged food to in-house supermarket brands could impact Amcor because generic products are generally imported.”
MacKenzie said earnings in the six months from January to June this year should benefit substantially from a combination of a weaker Australian dollar and lower costs for raw materials.
MacKenzie said Amcor is still interested in acquisitions but remains “a patient and disciplined buyer” unafraid to walk away from deals where it considers asset prices are too high.
“Any acquisition will be in our nominated growth segments of flexibles, tobacco packaging, custom PET or select segments in Australasia. It should also enhance our value proposition to customers and improve our cost position through operating synergies.”
