Packaging company Amcor Limited (ASX: AMC) has reported a decent set of results for the half-year ended 31 December 2013. These are the first results Amcor has reported as a stand-alone business since the demerger of its Australasia and Packaging Distribution business, Orora Ltd (ASX: ORA).
Underlying sales growth of 14.5% to $5.2 billion was achieved half-on-half, with net profit after tax up an impressive 21.2% to $326.6 million and earnings per share (EPS) up 21.5% to 27.1 cents.
The Flexibles division was the standout performer thanks largely to favourable movements in the Australian dollar against the Euro during the half. Revenues increased 15.6% from $3.1 billion to $3.6 billion and earnings before interest and tax (EBIT) soared 22.5% from $344 million to $421 million. Return on funds employed was flat at 23%.
Meanwhile the Rigid Plastics division reported an increase in revenues of 12.1% from $1.4 billion to $1.6 billion and EBIT of 13.3% from $123 million to $139 million. Returns on funds employed increased to 15.6%.
Shareholders will be pleased to receive a 19.5 cent interim dividend which was in line with last year's payment – a sound result considering the demerger of Orora.
Foolish takeaway
Management's view on the outlook for the full year was unchanged but still positive with Amcor expected to deliver another year of underlying profit growth. The outlook for the Flexibles division is for growth from emerging markets, benefits from acquisitions and ongoing operational improvements. Rigid Plastics is expected to enjoy higher earnings too.
The market appeared less than impressed with the financial results with the shares falling nearly 5% in early trade after the results were released. With the stock trading on a price-to-earnings ratio of 19 (annualised first half EPS) the market was probably looking for an even more bullish outlook from management to justify the current multiple.
