Amcor Q2 Earnings Call Highlights

Key Points

• On track with the Berry integration as synergy capture accelerated — $55M in Q2 and $93M in H1 — with a target of at least $260M in fiscal 2026 and $650M through fiscal 2028, supported by headcount reductions, site consolidations and early growth wins exceeding $100M annualized.
• Q2 results: revenue $5.4B, EBITDA $826M, adjusted EPS $0.86 and free cash flow $289M; the board declared a $0.65 quarterly dividend and management reaffirmed full‑year adjusted EPS guidance of $4.00–$4.15 (post 1-for-5 reverse split) and free cash flow of $1.8–$1.9B.
• Volume dynamics: core portfolio volumes were ~1.5% lower (total company ~2.5% down) with pet care and meat proteins outperforming, while weak non‑core businesses (notably North American beverage) should recover to ~7–8% margins in H2 for an implied ~$50M improvement; adjusted leverage exited Q2 at 3.6x, targeted 3.1–3.2x at year‑end.

Amcor NYSE: AMCR executives told investors the company remains on track to meet its fiscal 2026 commitments as it integrates Berry and advances a portfolio review that includes roughly $2.5 billion of non-core businesses. Management said second-quarter results were in line with expectations set in October, with synergy capture accelerating and full-year guidance reaffirmed.

Quarterly results and updated dividend

For fiscal 2026’s second quarter, Amcor reported revenue of $5.4 billion, EBITDA of $826 million, and EBIT of $603 million. CEO Peter Konieczny said performance reflected the impact of the Berry acquisition, disciplined cost management, productivity improvements, and accelerating synergies.

Adjusted EPS was $0.86 for the quarter, which management said was in line with expectations and included a one-time favorable tax benefit that was offset by weaker performance in the company’s non-core portfolio. Konieczny said performance in the non-core businesses is expected to improve in the second half.

Free cash flow was $289 million for the quarter after approximately $70 million of acquisition-related cash costs. The board declared a quarterly dividend of $0.65 per share, which management said was higher than the prior year and consistent with Amcor’s long-term commitment to annualized dividend growth.

Volumes: core portfolio outperformed the total company

Management emphasized performance in the company’s “core portfolio,” described as roughly $20 billion of the combined company’s business across six focus categories: health, beauty and wellness, protein, liquids, food service, and pet care. Konieczny said core portfolio volumes were approximately 1.5% lower year over year in Q2, similar to Q1, and about 100 basis points better than the total combined portfolio.

In the Q&A, Konieczny said total company volumes in Q2 were down about 2.5% and cautioned against overinterpreting modest quarter-to-quarter changes. He noted focus categories collectively outperformed the core portfolio, citing pet care as a standout with high single-digit growth and saying the company was likely gaining share there. Meat proteins were described as growing low single digits. He also said food service was somewhat weaker, which he attributed to value-conscious consumer behavior.

On the outlook, management said it is planning for a market environment in the second half that is “very much consistent” with the first half, describing the broader market as low single digits down. CFO Steve Scherger said the bottom end of the company’s guidance assumes a similar volume environment to what it has been experiencing, while the upper end would align with improved customer activity and the capture of revenue synergies.

Synergies accelerated; pipeline supports fiscal 2026 target

Amcor said synergy benefits were at the upper end of guidance, totaling $55 million in Q2 and $93 million in the first half. Management reiterated confidence in delivering at least $260 million of synergies in fiscal 2026 and $650 million through fiscal 2028.

Scherger said the quarter’s EBIT synergy capture split “quite evenly” between procurement and G&A, with an additional contribution from financial synergies. Konieczny highlighted organizational redesign and system consolidation efforts, noting headcount has been reduced by more than 600 consistent with the integration roadmap. He also said procurement synergies are ramping as the company consolidates spend, harmonizes specifications, and aligns pricing across the supplier base.

Management also pointed to progress on operational synergies, with approximately 20 site closures or restructures approved or announced, though it said these benefits are expected to primarily materialize in years two and three of the synergy timeline.

On growth synergies, Konieczny said annualized sales revenue from business wins directly linked to the Berry combination now exceeds $100 million, calling it a strong start toward a three-year target of $280 million. He said delivery against these wins is expected to commence in the second half of fiscal 2026. As one example, management described support for a major global pharmaceutical customer launching a solid oral dose GLP-1 therapy drug, with supply expected to include blister packaging in Europe and rigid containers in the U.S.

Segment details: cost discipline offsets volume pressure

In Global Flexible Packaging Solutions, sales increased 23% on a constant-currency basis, driven primarily by the Berry acquisition. On a comparable basis, volumes were down about 2%, with developed regions down low- to mid-single digits and Europe described as “modestly more challenged” than North America. Emerging markets showed low single-digit growth in Asia Pacific, offset by modestly lower volumes in Latin America. By category, volumes were higher in pet food and meat proteins, offset by lower volumes in other nutrition, liquids, and unconverted film and foil.

Adjusted EBIT for the flexible segment rose 22% on a constant-currency basis to $402 million, including approximately $65 million of acquired earnings net of divestments. On a comparable constant-currency basis, adjusted EBIT was up about 1%, with an adjusted EBIT margin of 12.6% reflecting synergy benefits. Scherger added in the Q&A that flexible segment synergies were about $10 million in the quarter and that the core flexible business operated close to flat despite the volume decline.

In Global Rigid Packaging Solutions, sales increased significantly on a constant-currency basis, again mainly reflecting the acquisition. On a comparable basis, volumes were flat year over year excluding non-core businesses, which management said represented a sequential improvement driven by stronger emerging market performance, particularly in Latin America. Adjusted EBIT was $228 million, driven by approximately $165 million of acquired earnings net of divestments. Excluding non-core businesses and on a comparable constant-currency basis, adjusted EBIT was up 15% due to accelerating synergy benefits, with adjusted EBIT margin (excluding non-core) improving about 200 basis points to 12%.

Guidance reaffirmed; non-core improvement expected in second half

Amcor reaffirmed full-year guidance and updated the adjusted EPS range to $4.00 to $4.15 per share to reflect a one-for-five reverse stock split. Management reiterated expectations for 12% to 17% year-over-year adjusted EPS growth and reaffirmed free cash flow guidance of $1.8 billion to $1.9 billion. For the third quarter, the company expects adjusted EPS of $0.90 to $1.00, including approximately $70 million to $80 million of synergy benefits.

Scherger said the implied second-half step-up is driven by three factors: building synergy benefits, typical seasonality, and improvement in non-core businesses supported by renegotiated customer contracts and better operating performance compared with the prior year.

On the non-core portfolio, management said Q2 was particularly weak, primarily in North American beverage. Scherger said non-core EBIT margins were in the 3% range in Q2 and around 5% in the first half, but management expects margins to return to more traditional levels of roughly 7% to 8% in the second half. He said that would represent about a $50 million improvement first half to second half for the non-core business set. Konieczny said contract renegotiations improved commercial terms and provided better line of sight on volumes, and he said there was no cost associated with renegotiating those contracts.

On the balance sheet, Scherger said adjusted leverage exiting the quarter was 3.6x and the company continues to expect fiscal year-end leverage of 3.1x to 3.2x, while maintaining its commitment to an investment-grade credit rating and a modestly growing dividend.

About Amcor NYSE: AMCR

Amcor NYSE: AMCR is a global packaging company specializing in the design, development and production of flexible and rigid packaging solutions for food, beverage, pharmaceutical, medical, home and personal care, and other consumer and industrial products. The company's product portfolio encompasses flexible films, pouches, specialty cartons, rigid containers, metal closures and dispensing systems. Amcor's packaging solutions are engineered to preserve product quality, extend shelf life and meet the specific requirements of a wide range of end markets.

Founded in its current form in 2005 following a spin-off from a mining conglomerate, Amcor expanded its capabilities and geographic footprint through organic investments and strategic acquisitions.

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