Australian-based packaging giant Amcor Ltd. plans to split in two, retaining its plastics divisions and establishing a new company for its other units.
The multinational packaging company, headquartered in Hawthorn, Australia, says Australasian and Packaging Distribution Ltd. (AAPD) will be a separate listed company by the end of the year. AAPD will retain the fiber, glass and beverage can packaging operations in Australia and New Zealand, and Amcor's packaging distribution operations in North America and Australia.
The demerger comes on the heels of strong earnings from Amcor's flexible and rigid plastic packaging businesses.
Amcor said the new AAPD business, with annual sales of A$2 billion (US$1.8 billion), will be well placed for success with large cost savings expected over the next three years.
It said Amcor is well positioned for the next year and will have a “very focused” portfolio after the AAPD demerger. The group will focus on flexible and rigid plastics and tobacco packaging.
Ron Delia, executive vice president of finance, told investors both AAPD and Amcor, post-merger, will be set up for success and strong cash flows, as Amcor reported an 8.6 percent increase in underlying net annual profit to A$689.5 million (US$622 million) for the fiscal year ended June 30, 2013.
Net profit after taxes for the year was A$600.6 million (US$542 million), up 45.6 percent from a year ago.
“The rigid plastics group had a solid year with earnings up 5.2 percent and returns of 16.9 percent. The business secured substantial new volumes in the beverage and diversified products segments that will contribute to future earnings growth,” said Amcor managing director and CEO Ken MacKenzie.
“The flexible packaging segment had a strong year with profit up 11.9 percent and record returns of 24 percent.”