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Amcor strong despite big one-off charge

AAP logoAAP 25/08/2016 Trevor Chappell

Packaging giant Amcor insists its underlying performance and outlook remain strong despite a 64 per cent drop in full-year profit.

Amcor's net profit for the 12 months to June 30 fell to $US244.1 million ($A320.1 million), from $US680.3 million a year earlier, largely because of a previously announced impairment linked to an accounting change related to its Venezuelan business.

Excluding significant items, Amcor's profit was flat at $US671.1 million.

"The company is very well positioned for continued growth. The outlook for the 2016/17 year is for higher earnings than the 2015/16 year, expressed in constant currency terms," Amcor managing director Ron Delia said.

He said Amcor's 2016 result was strong, with growth in earnings, returns and cash flow despite a challenging global economic environment.

"The defensiveness and resilience of our businesses was once again evident, with balanced growth across the portfolio," Mr Delia said.

The one-off charge of $US384.7 million that weighed down the bottom line related to currency restrictions that had made it hard for Amcor's operations in Venezuela to access US dollars needed to import raw materials.

Most of Amcor's sales are to the food, beverage and healthcare markets, which are fairly resilient when economic conditions are challenging.

Amcor said it had generated solid growth in both developed and emerging markets, with both its flexible packaging and rigid plastics businesses achieving higher results.

The flexibles business benefited from higher demand for tobacco packaging as customers built inventories ahead of regulatory changes that took effect in May 2016.

The rigid plastics business experienced strong demand in all main product areas in North America.

The company announced or completed eight acquisitions in the US, Canada, South Africa, South America, China and India in 2016, and invested in three new packaging facilities.

Amcor's operations in China were stable amid slowing economic growth for that country.

"It (China) is a business that has attractive margins and returns, and we're continuing to invest in China," Mr Delia said.

"The most important thing for us is to remain disciplined and not chase volume at the expense of profit. There's no question in our minds that the growth will return to that market."

Macquarie Capital analysts John Purtell and Niraj Shah said Amcor's flexibles and rigid plastics divisions had beaten earnings expectations, and overall Amcor had produced a solid result that was "once again hard to fault".

Shares in Amcor were 67 cents, or 4.38 per cent, higher at $15.98 at 1500 AEST.

CURRENCY WEIGHS ON AMCOR PROFIT

* Net profit down 64.1pct to $US244.1m

* Revenue down 2.0 per cent to $US9.42bn

* Final dividend up one US cent to 22 US cents, unfranked

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