This top 50 ASX stock is diving 5% despite a strong outlook

Investors were looking for more.

| More on:
Woman inspecting packages.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX stock Amcor PLC (ASX: AMC) has dropped into the red on Friday after the company posted its financials for the first quarter of FY25.

Shares in the packaging solutions company currently fetch $15.95 apiece, 5% lower on the day as investors react to the news.

The downsides come despite management reaffirming a positive outlook for the year. Here are the details.

ASX stock slides on Q1 results

In its latest quarterly update, Amcor reported mixed financial results. Here are the highlights:

  • Net sales fell 3% year-over-year to US$3.35 billion, impacted by lower raw material costs and foreign exchange rates
  • Adjusted pre-tax earnings rose 3% to US$365 million
  • Reported net income came in at US$191 million, translating to earnings per share (EPS) of 13.2 US cents, up from 10.5 US cents the prior year
  • Amcor increased its quarterly dividend to 12.75 US cents per share

What else happened in Q1 FY25?

The ASX stock reported steady volume growth in its core Flexibles and Rigid Packaging segments, with sequential improvement in customer demand.

Total volumes shipped were up 2% over the year, also up about 100 basis points from the previous quarter.

But there were headwinds, which management put down to softer demand from the US beverage and healthcare industries, plus the effect of sales price and sales mix.

In its flexibles segment, revenues of US$2.6 billion were down 1% on a reported basis, mostly impacted by unfavourable exchange rates.

Despite this, volumes were 3% higher in this segment over the twelve months.

Meanwhile, the Rigid Packaging division saw 8% lower sales growth compared to Q1 FY24, with volumes and average pricing both down. This may have impacted the ASX stock today.

What did management say?

Amcor's CEO, Peter Konieczny, expressed optimism about the company's growth trajectory:

I am pleased with the overall performance trajectory of the business and I am excited about the significant opportunities we have ahead of us to enhance our profitable organic growth profile, continue to build earnings momentum and evolve into an even stronger company than we are today.

We have already taken a number of concrete actions to further leverage Amcor's market leading positions and capabilities and strengthen our ability to generate attractive, sustainable shareholder returns.

The positive tone suggests Amcor is well-positioned to capitalise on ongoing customer demand, particularly with improvements in key segments.

What's next?

Looking ahead, the ASX stock aims to strengthen its market presence by focusing on organic growth and potential acquisitions.

The company reaffirmed its fiscal 2025 outlook, with expected adjusted EPS between 72 and 76 US cents and adjusted free cash flow of US$900 million to $1 billion.

Exchange rates could also be a factor to consider, the company says.

Assuming current exchange rates prevail through fiscal 2025, movements in exchange rates are not
expected to have a material impact on reported EPS.

ASX stock snapshot

The Amcor share price has been on a solid run in 2024, with shares up nearly 12% in that time. Investors have sold the ASX stock today after the Q1 FY25 numbers, despite the reaffirmed guidance.

In the last 12 months, it has rallied more than 16%.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Amcor Plc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Two male ASX 200 analysts stand in an office looking at various computer screens showing share prices
Earnings Results

Macquarie share price sinks despite $1.6b half year profit and new buyback

How did this investment bank perform during the first half? Let's find out.

Read more »

A woman holds her hand out under a graphic hologram image of a human brain with brightly lit segments and section points.
Earnings Results

Why the BrainChip share price is in the spotlight this week

Today's reaction is in stark contrast to the day of the release.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Healthcare Shares

2 All Ords ASX healthcare shares making BIG moves on quarterly updates

These two ASX healthcare companies are seeing heavy trading on Thursday.

Read more »

A businesswoman ponders why her boat is sinking in the ocean.
Resources Shares

Lake Resources share price sinks on quarterly cash flow news

Let's take a look at the highlights of the company's Q3 update.

Read more »

Lithium ion batteries
Earnings Results

Needs a recharge: Novonix share price sees red after Q3 earnings

Investors were likely expecting a tad more.

Read more »

chip and tech stocks represented by two computer chips side by side
AI Stocks

Up 237% in 2024, why is the Appen share price racing higher again today?

Investors are bidding up Appen shares again today. But why?

Read more »

Miner looking at a tablet.
Resources Shares

Lynas share price marching higher on quarterly rare earths production rebound

The ASX 200 rare earths stock is outpacing the benchmark on Wednesday.

Read more »

Miner standing in front of a vehicle at a mine site.
Materials Shares

ASX lithium share slides following 39% quarterly revenue plunge

Market conditions continue to pressure the ASX lithium miner.

Read more »