Multinational companies can have multinational problems. And such is the case for Amcor Ltd., which is signaling there could be plant closures.
The Hawthorn, Australia-based packaging company is out with a new warning about deteriorating economic conditions for the firm in Venezuela. Amcor also plans to restructure its flexibles segment, which includes tobacco packaging.
Amcor runs six rigid plastics plants in Venezuela, where the company has operated for nearly 20 years.
But economic woes in that country — where food lines are common and rampant inflation has taken hold — is causing Amcor take a $350 million charge against earnings. After this one-time charge there will be no material balance sheet exposure regarding Venezuela.
The company also is adopting the country's floating currency exchange rate to “eliminate the potential for material earnings risk or volatility” starting June 30.
“We have announced a proactive and conservative accounting change for this business. This will eliminate risk and allow us to focus on the many opportunities we have within emerging markets including the Latin America region. For local operations our priorities remain to ensure co-workers are safe and customers are well supported,” Amcor CEO Ron Delia said in a statement.
In the flexibles market, meanwhile, Amcor revealed a plan that “will likely result in the restructuring or closure of several plants in developed markets.”
The plan, Amcor said, is to align capacity with demand, increase utilization and improve costs.
Reorganization will include streamlining the organization, “particularly in Europe,” to lower overhead costs, increase customer focus and improve speed to market by reducing complexity, the company said.
Amcor did not provide exact details of the reorganization, indicating plans are now being developed.
Delia called the company's flexible and tobacco packaging business strong, but added that the company needs to take decisive action to make sure the firm is aligned with “market growth opportunities and customer needs.”