Amcor plc (AMCR) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, with significant EBIT growth and increased dividends. The strategic focus on synergy realization and core portfolio optimization is promising, despite a slight volume decline. The Q&A reveals a consistent market outlook and potential EBIT improvements, with management addressing concerns effectively. The announcement of increased dividends and strong cash flow further supports a positive sentiment, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Key Financial Performance
Adjusted EPS Up 7% for the quarter and 14% for the first half. This increase was driven by synergy benefits, disciplined cost management, and productivity improvements.
Revenue $5.4 billion for the quarter. This is significantly higher than the prior year due to the Berry acquisition, disciplined cost management, improved productivity, and accelerating synergies.
EBITDA $826 million for the quarter. This is significantly higher than the prior year due to the Berry acquisition, disciplined cost management, improved productivity, and accelerating synergies.
EBIT $603 million for the quarter. This is significantly higher than the prior year due to the Berry acquisition, disciplined cost management, improved productivity, and accelerating synergies.
Free Cash Flow $289 million for the quarter after funding approximately $70 million of acquisition-related cash costs. This aligns with expectations and reflects strong cash flow generation.
Dividend $0.65 per share for the quarter, which is an increase over the prior year, reflecting a long-term commitment to annualized dividend growth.
Adjusted EBIT Margin (Core Portfolio) Approximately 12%, reflecting a higher concentration of advanced solutions, improved mix within the core portfolio, and synergy benefits.
Adjusted EBIT (Global Flexible Packaging Solutions) $402 million, up 22% on a constant currency basis. This increase was driven by $65 million of acquired earnings net of divestments and synergy benefits.
Adjusted EBIT (Global Rigid Packaging Solutions) $228 million, up over last year on a constant currency basis. This increase was driven by $165 million of acquired earnings net of divestments and synergy benefits.
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Operating Highlights
Acquisition of Berry: Amcor's acquisition of Berry has created a global leader in consumer packaging and dispensing solutions, strengthening its platform and growth roadmap.
New Product Launch: Amcor supported a major global pharmaceutical customer in launching a solid oral dose GLP-1 therapy drug, leveraging its expanded supply chain and multi-format capabilities.
Core Portfolio Focus: Amcor's $20 billion core portfolio includes six focus categories: health, beauty and wellness, protein, liquids, foodservice, and pet care, where it holds leadership positions and drives innovation.
Emerging Markets Growth: Volumes in emerging markets showed low single-digit growth, particularly in Latin America and Asia Pacific.
Synergy Realization: Amcor achieved $93 million in synergies in the first half of fiscal 2026, with a target of $260 million for the year and $650 million by fiscal 2028.
Cost and Productivity Improvements: Disciplined cost management and productivity improvements offset lower volumes, maintaining financial performance.
Portfolio Optimization: Amcor is evaluating alternatives for $2.5 billion of noncore businesses, including the North American beverage business, to focus on high-value opportunities.
Financial Guidance Reaffirmed: Amcor reaffirmed its fiscal 2026 adjusted EPS guidance of $4 to $4.15 per share and free cash flow guidance of $1.8 billion to $1.9 billion.
Integration Progress: Amcor has reduced headcount by over 600 and closed 20 sites as part of its integration roadmap, with operational synergies expected to materialize in years 2 and 3.
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Risk or Challenges
Safety Performance: A modest increase in the total recordable incident rate to 0.52 compared to last year, attributed to the acquisition of Berry. This could indicate challenges in maintaining safety standards during integration.
Market Environment: The market remains challenging and dynamic, with modestly declining volumes in core business categories and lower volumes in developed regions like Europe and North America.
Noncore Business Performance: Weaker performance in the noncore business portfolio, which is expected to improve in the second half but currently poses a risk to overall financial performance.
Portfolio Optimization: Ongoing evaluation of $2.5 billion in noncore businesses, including the North American beverage business, which could lead to resource allocation challenges and operational disruptions.
Synergy Realization: While synergies are progressing, the integration process involves significant restructuring, including over 600 headcount reductions and 20 site closures, which could disrupt operations.
Volume Declines: Core portfolio volumes declined approximately 1.5% year-over-year, with specific challenges in categories like liquids and unconverted film and foil.
Emerging Markets: Modest volume growth in emerging markets is offset by challenges in Latin America, which could hinder overall growth in these regions.
Debt and Leverage: Adjusted leverage remains high at 3.6x, with expectations to reduce it to 3.1-3.2x by year-end, posing financial risk if cash flow targets are not met.
Capital Spending: Increased capital spending of $850-$900 million for fiscal 2026 could strain financial resources if expected returns are not realized.
Customer Contracts: Performance in noncore businesses is expected to improve due to renegotiated customer contracts, but this remains a risk if these improvements do not materialize as planned.
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Guidance & Outlook
Adjusted EPS Guidance: Reaffirmed fiscal 2026 adjusted EPS expectations to $4 to $4.15 per share, reflecting a 12% to 17% year-over-year growth, primarily driven by synergy capture and strong cost control.
Free Cash Flow Guidance: Reaffirmed fiscal 2026 free cash flow guidance of $1.8 billion to $1.9 billion, with stronger cash flow expected in Q3 and Q4.
Synergy Realization: On track to deliver at least $260 million of synergies in fiscal 2026 and $650 million over three years, with $70 million to $80 million of synergy benefits expected in Q3.
Capital Spending: Fiscal 2026 capital spending expected to range between $850 million to $900 million.
Portfolio Optimization: Advancing alternatives for $2.5 billion of noncore businesses, including the North American beverage business, to ensure resources are allocated to high-value opportunities.
Revenue and Market Trends: Annualized sales revenue from business wins linked to the Berry acquisition now exceeds $100 million, with delivery expected to commence in the second half of fiscal 2026. Growth synergies are expected to continue as customers validate the value of the expanded footprint and integrated product offerings.
Segment Performance: Global Flexible Packaging Solutions segment sales increased 23% on a constant currency basis, with adjusted EBIT margin at 12.6%. Global Rigid Packaging Solutions segment sales also increased significantly, with adjusted EBIT margin at 12%.
Leverage and Credit Rating: Adjusted fiscal year-end leverage expected to be in the 3.1 to 3.2x range, maintaining a commitment to an investment-grade credit rating.
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Shareholder Return Plan
Quarterly Dividend: The Board declared a quarterly dividend of $0.65 per share, which is an increase over the prior year. This reflects the company's long-term commitment to annualized dividend growth.
Share Repurchase: No specific share repurchase program was mentioned in the transcript.
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Key Q&A
Q:What are the expectations for volume performance in the next two quarters of fiscal year '26?
A:Management expects the back half of the year to be consistent with the first half, with a market environment that is low single digits down. They are focusing on cost management and growth initiatives, with some potential for improvement but no significant changes anticipated.
Q:What initiatives are being enacted in the fourth quarter to support guidance?
A:Management highlighted three drivers for EBIT improvement in the second half: seasonality, synergy growth (at least $260 million for the year), and improvement in noncore businesses, particularly the North American beverage business. They expect synergy capture and operational improvements to continue into Q4.
Q:How does the company's volume performance compare to the broader industry?
A:The company’s overall volume performance in Q2 was down 2.5%, similar to Q1. The core portfolio was down 1.5%, with rigids flat and flexibles down low single digits. Emerging markets showed growth, and focus segments like pet care and meat proteins outperformed the core business.
Q:What is the expected improvement in noncore EBIT contribution in the second half?
A:Noncore EBIT margins are expected to improve from 5% in the first half to 7%-8% in the second half, driven by better contractual terms, pricing, and operational improvements. This represents about a $50 million improvement in EBIT.
Q:What are the exit rates on volume for focus categories in flexible packaging?
A:Focus categories collectively outperformed the core business in Q2, with volumes 50-100 basis points better than the core business. Pet care showed strong growth, meat proteins grew low single digits, and dairy was softer. Health care volumes were slightly down due to a weaker U.S. flu season.
Q:What is the split between G&A and procurement synergies in the second quarter?
A:The $50 million of EBIT synergies in Q2 were evenly split between G&A and procurement. Procurement synergies are expected to ramp up as inventory washes through, and operational synergies will start to contribute post-fiscal year-end.
Q:Are raw material synergies affected by changes in raw material prices?
A:Management believes raw material synergies are more volume-driven and not significantly impacted by changes in raw material prices. The company’s procurement spend is broad, covering resin-based materials and other inputs like inks and adhesives.
Q:How are customers performing in the context of the overall market?
A:Management noted that customers are shifting focus from price to volume, with increased promotional activities. They are positioning themselves to support customers but are not assuming significant improvements in the back half.
Q:What is the impact of GLP-1 drugs on the business?
A:Management sees GLP-1 drugs as a positive trend for health. While there may be a shift from unhealthy to healthier categories, the company’s broad exposure across categories makes it robust to this trend. They are also well-positioned to support customers through innovation.
Q:What is the focus of the company’s CapEx budget?
A:The CapEx budget of $850-$900 million is focused on growth investments in focus market categories, particularly those with opportunities for differentiation.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific exit rates for focus categories in flexible packaging, instead providing general performance trends. Additionally, they did not provide detailed data on the impact of GLP-1 drugs on specific categories or the exact cost implications of renegotiated customer contracts.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America market
Global
Sales segment
Scherger
Volumes
acquisition Slide
action pace
action term
basis point
benefit line
benefit synergy
beverage action
capability people
category portfolio
core portfolio
cost productivity
divestments currency
dividend
end benefit
flexibles segment
focus category
integration
line synergy
market volume
momentum
noncore business
opportunity core
optimization action
portfolio EBIT
portfolio optimization
progress alternative
realization
road map
segment currency
share stock
step PK
stock split
track
AMCR Transcript
Amcor plc (AMCR) Q2 2026 Earnings Call Transcript
Positive2-3
The earnings call highlights strong financial performance, with significant EBIT growth and increased dividends. The strategic focus on synergy realization and core portfolio optimization is promising, despite a slight volume decline. The Q&A reveals a consistent market outlook and potential EBIT improvements, with management addressing concerns effectively. The announcement of increased dividends and strong cash flow further supports a positive sentiment, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Amcor plc (AMCR) Q1 2026 Earnings Call Transcript
Unknown11-6
The earnings call presents mixed signals: positive EBIT growth, margin improvements, and synergies suggest strong financial health. However, challenges like volume declines, particularly in Europe, and lack of clarity on divestment timelines pose concerns. The Q&A reveals management's cautious approach and uncertainties in certain sectors. Despite strong EPS growth projections, flat volume expectations and market softness in key areas temper optimism. Without a market cap, the impact on stock price is uncertain, leading to a neutral prediction.
Amcor plc (AMCR) Q4 2025 Earnings Call Transcript
Positive8-14
The earnings call highlights strong financial performance, with significant revenue growth driven by the Berry acquisition and favorable synergies. Despite challenges in the North American beverage business, the company maintains a positive outlook with clear strategies for improvement. The focus on deleveraging and potential future share buybacks is a positive signal. The Q&A section did not reveal any major negative trends or risks, and the synergy targets are on track. Overall, the positive elements outweigh the concerns, suggesting a positive stock price movement in the near term.
Amcor plc (AMCR) Q3 2025 Earnings Call Transcript
Unknown4-30
The earnings call highlights both positive and negative aspects. While there is clear visibility to EPS growth and a modest increase in dividends, competitive pressures, regulatory issues, and supply chain challenges pose significant risks. The Q&A reveals management's avoidance in providing detailed synergy breakdowns and highlights weakening demand, particularly in North America. Despite expected synergies, high leverage and net cash outflow are concerning. The market is likely to react negatively, especially given the uncertain demand environment and lack of guidance for 2026.
AMCR Slides
AMCR Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
