Russia's ongoing invasion of Ukraine continues to reshape one of the largest plastics packaging companies in the world.
Amcor plc, with operations around the globe, is now exiting the Russian market as a result of the invasion of Ukraine.
News of the decision comes months after Amcor scaled back operations in March following Russia's aggression that began in late February.
And, in an unrelated deal, the firm also is buying a flexible packing operation in Kralice na Hané, Czech Republic, from a Russian company.
Amcor, in March, decided to limit production at the company's three plants in Russia by suspending new projects and investments and discontinuing exports. The company, at the time, also decided to focus manufacturing on existing multinational customers.
Impacted operations included a flexible packaging plant in Veliky Novgorod and a specialty cartons plant in St. Petersburg.
"We decided to sell these three plants, which, for a start, produced around 4-5 percent of our EBIT. The planning assumption, and the assumption that's embedded in our guidance for the year, is that we complete that sale process at some point in the second half of the year," CEO Ron Delia said on a recent earnings call.
The three factories generated 2-3 percent of Amcor's total sales prior to the invasion, and the company had been in Russia for more than 20 years.
Meanwhile, the new Amcor location in the Czech Republic was opened in 2019 by Danaflex, a Russian company based in Kazan, and operated under the name DG Pack.
"It was opened right at the outset of the pandemic, so it's very low utilization. It gives us instant capacity in Central Europe, and it happens to have assets that are easily directed towards some of our priority segments, including coffee and pet care," Delia said. "So we are essentially buying a plant more so than a business."
Amcor indicated the Czech site provides space to potentially consolidate operations in the region.
"With this acquisition we are investing to accelerate the organic growth momentum of our flexibles business in Europe in attractive segments," said Michael Zacka, president of Amcor Flexibles Europe, Middle East & Africa, in a statement. "The scalable nature of the acquired site and its attractive location further bolsters our ability to service strong customer demand and generate strong returns for Amcor shareholders."
Amcor expects to spend the next two years funneling business to the location and the company highlighted the ability to even expand the location. "So, pretty excited about that little bolt-on in that part of the world," Delia said.
Amcor, with $15 billion in annual sales for fiscal year 2022, has 44,000 employees at 220 locations in 43 countries. The company makes both flexible and rigid plastic packaging.