By a staff reporter, with AAP
Shares in Amcor Ltd hit a record high after the group reiterated its full-year guidance following a lift in half-year net profit, and announced its was cutting about 300 jobs.
Amcor shares closed 2.58 per cent to $9.14, against a benchmark index rise of 0.59 per cent.
Earlier, the stock hit as high as $9.30, its highest point since listing on the Australian Securities Exchange.
In the six months to December 31, Amcor posted a net profit of $238.3 million, a 16 per cent lift on the previous corresponding period.
Revenue in the period totalled $411.5 million, a year-on-year increase from $398.6 million.
Amcor will pay an unfranked interim dividend of 19.5 cents, payable on March 17.
The company said volumes in its key markets in developed countries were stable in the period, while volumes grew strongly in its emerging markets.
Amcor also announced plans to cut about 300 jobs at three manufacturing sites in Victoria and Queensland, blaming the high value of the Australian dollar and increasing cost pressures.
Amcor Australasia managing director Nigel Garrard said the group would "...take steps to realign its Australian operations to the challenging conditions facing all Australian manufacturers, resulting in approximately 300 redundancies".
Strong $A weighed: MacKenzie
Profit growth also came despite the impact of the high Australian dollar on its earnings from overseas, which detracted $20 million from its profit, Amcor said.
"The outlook for the current year remains unchanged from the full year results in August," chief executive Ken MacKenzie said in a statement.
"It is expected Amcor will deliver another year of higher underlying profits in the current year."
Amcor's underlying profit in the six months to December of $322 million was up six per cent from the previous corresponding period.
Amcor took a $83.7 million hit in significant items relating to the closure of its cartonboard plant in Queensland, and another $20 million charge related to the high Australian dollar.
The group's flexible packaging division's profit before interest and tax rose 4.7 per cent to $344.6 million after benefiting from volume growth in emerging markets and the integration of the Aperio and Aluprint acquisitions.
The rigid plastics division also increased its profit, by eight per cent to $122.9 million, while the Australasian and packaging section had a 7.8 per cent drop to $82.8 million.
Amcor increased its unfranked interim dividend to 19.5 cents a share from 18 cents.
Morningstar analyst Nathan Zaia said Amcor's results had come in a little below expectations, mainly due to lower profits in the flexible packaging division during the second half.
"Management say this is a temporary effect of acquiring lower margin businesses. Once synergies are extracted, profitability will return," he wrote in a note to clients.
"Given management's track record of integrating acquisitions in recent years, particularly with Alcan, we are inclined to back management's capability to get the job done."
Botany plant expected to drive earnings
Amcor believes its new recycled paper machine at its Botany mill in New South Wales and recent acquisitions such as the Shorewood tobacco packaging business, will drive its earnings in the short term.
Mr MacKenzie said Amcor expected another year of higher underlying profits for the full financial year.
He said he was extremely pleased with the first half performance, and there were a number of initiatives across the group that would contribute to ongoing earnings growth.
"In the short term, the benefit from the recent acquisitions (including Shorewood) and the successful commissioning of the new Botany mill will drive earnings," Mr MacKenzie told reporters.
"In the longer term, our disciplined growth agenda will deliver ongoing improvements in shareholder returns."
Mr MacKenzie said the start-up of the new paper recycling machine at the Botany mill was progressing as expected and the ramp-up to full production was expected to be completed by June 2014.
The mill will introduce into the Australian market higher-quality recycled paper for the corrugated box market.
Mr MacKenzie said the new facility would deliver $50 million in profit benefits over time.
He said the $US115 million acquisition of the Shorewood tobacco packaging assets, which was announced on Friday, was a "very good fit" with Amcor's operations and gave it increased exposure to the growth markets of Asia and Latin America, and improved Amcor's cost position in the US.
Targeted benefits from the acquisition were $US13 million.
Mr MacKenzie said that over the last three years, Amcor's businesses had shown resilience to subdued economic conditions and delivered strong earnings growth.
But, he said there were two speeds out there.
"There's the mature markets which tend to be, in our case, flat, but we're getting double-digit (revenue) growth in emerging markets."
China was leading the way in emerging markets.
Read Amcor's H1 report below
