Amcor bets the worst is behind

The world’s biggest packaging company, Amcor, is banking on continued improvements in global sales and ongoing costcutting programs to maintain its full-year profit forecast.

Its quest is on the back of flagging sales and margins in the first half brought on by soft market conditions in healthcare and beverages, and a general trend for companies to run down their existing supplies of packaging.

Amcor chief executive Ron Delia said “December was the low point”, and on Wednesday announced a higher-than-expected dividend – of more than 5 per cent in Australia dollar terms – for the dual listed company.

“We have seen volumes improve in January relative to the first half, and we expect the business to build momentum in the second half, including delivering mid single-digit adjusted earnings growth in the fiscal fourth quarter,” Mr Delia said.

Amcor reaffirmed its fullyear guidance of earnings per share of between US67c and US71c a share, and announced an increased quarterly dividend of US12.5c per share – up from US12.25c in the previous corresponding period – for US stock, and an unfranked dividend of 18.98c per share for the ASX-listed securities.

In Australian dollar terms, the second quarter dividend equated to a more than 5 per cent jump on the previous corresponding period, according to Atlas Funds Management chief investment officer Hugh Dive, whose firm’s second-biggest overweight position is Amcor.

The fund manager said the company was benefiting, at least from a dividend perspective, from the weak Australian dollar.

“We like the quarterly dividend,” Mr Dive said. “It’s a relatively stable company, a good blue chip, and it looks pretty cheap compared to the rest of the market.”

Amcor operates 218 packaging manufacturing factories in 41 countries, and is considered a litmus test for the strength of the global economy, as its packaging is used in most consumer goods.