AMC -0.09%: delivered a better-than-expected fourth quarter, with revenue and earnings both ahead of expectations and encouraging signs that the benefits from the Berry Global acquisition are beginning to come through. The shares were a little softer after the result, but the underlying trends were constructive, particularly around volumes, cost recovery and synergies.
Key highlights:
- Q4 net sales of US$6.4 billion, ahead of the US$5.99 billion expected.
- Adjusted EPS of US$1.23, up 23% and ahead of expectations around US$1.20.
- Quarterly dividend increased 2% to US65c per share.
One of the most important parts of the result was the improvement in volumes. Amcor saw a return to modest positive volume growth across its six core segments, with particular strength in food service, pet care and protein. Management also said those trends continued into July, which is encouraging after several years of subdued demand and destocking.
The Berry integration is also tracking better than planned. Amcor achieved around US$285 million of synergies in FY26, roughly 10% ahead of its initial first-year target and already close to half of the three-year US$650 million goal. Management expects the bulk of the remaining benefits to come through in 2027.
Input-cost inflation remains a challenge, particularly following the Iran conflict, but Amcor passed through the vast majority of those higher costs during the quarter, including around US$280 million of pricing.
The main area to watch remains cash generation and leverage. FY26 free cash flow of US$1.3 billion came in below the company’s prior range, while debt remains elevated following the Berry acquisition. Management continues to prioritise deleveraging while also maintaining its commitment to modest dividend growth.
In terms of guidance, Amcor expects adjusted EPS of around US$1.80–1.90 for the six-month transition period to December and is targeting mid-single-digit EBITDA growth through the transition period and into 2027.
MM’s view: This was a solid result and another step toward validating the Berry acquisition. Volumes are finally improving, synergies are running ahead of plan and Amcor is successfully passing through higher input costs. The remaining debate is around leverage and cash conversion, but with the shares still offering an attractive yield and earnings growth set to improve as integration benefits build, we remain comfortable holders.
MM is long & bullish AMC ~$66
Add To Hit List
