Three acquisitions over the past 12 months put packaging giant Amcor Ltd. on track to achieve cost synergies of US$97 million to US$117 million in the first six months of this year, said Chairman Chris Roberts.
In an address at the Melbourne-based company's annual general meeting, Roberts said the savings will be generated by integrating its acquisitions: Ball Plastics Packaging, the former Alcan Packaging assets and B-Pack Due SpA, a cast polypropylene film maker in Campiglia Marittima, Italy.
Roberts said the Ball acquisition is an important opportunity for Amcor's rigid plastics division to expand its position in the diversified products market in North America. The rigid plastics division saw higher volumes due to a warm U.S. summer.
Roberts said Amcor's profit after tax and before significant items for the year up to June 30 rose 13.5 percent to US$400 million.
Amcor Managing Director and CEO Ken MacKenzie said the opportunity to buy the Alcan Packaging assets came along at exactly the right time.
The business was a perfect fit strategically, he added.
About 80 percent of Alcan Packaging's assets are in the flexible packaging sector, about 15 percent in tobacco packaging and 5 percent in specialty rigid plastics. MacKenzie said that is a perfect alignment with our nominated growth segments.
The cost savings will be achieved through reduced overhead and improved purchasing.
MacKenzie said the B-Pack Due acquisition gives Amcor the ability to move high-value film purchases in-house and exclusive access to important technology used in manufacturing high-performance films.
He said the key driver for the Ball buy was to expand its fast-growing, higher-value-added diversified products business, which targets health care, pharmaceutical, personal care and food.
Ball Plastic Packaging's five North American plants generate sales of about US$600 million a year. Earnings are 50 percent from diversified products and custom beverages and 50 percent from carbonated soft drinks.
MacKenzie said Amcor's diversified products segment achieved organic growth of 15 percent in the first six months, on sales of US$171 million. The Ball acquisition helped lift sales past US$391 million. The business will have a much broader range of technologies and increased scale in key end markets, he said.
He said integration of the acquisitions is going smoothly.