Amcor plc

Ladies and gentlemen, thank you for standing by, and welcome to the AMCOR Half-Year 2020 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Tracy Whitehead, Head of Investor Relations. Please go ahead.

Thank you and welcome to Amcor's first-half earnings call. Greetings to those of you in the US and good morning in Australia. Joining me on the call today is Ron Delia, Chief Executive Officer and Michael Casamento, Chief Financial Officer. At this time, I'll direct you to our website, amcor.com, under the investor section where you'll find a press release and presentation which will be discussed on the call today. We'll also discuss non-GAAP financial measures as we talk about performance against combined comparative information. Reconciliations of these non-GAAP measures can be found in the press release and presentation on our website. Also, a reminder that statements regarding future performance of the company made during this call are forward-looking and subject to certain risks and uncertainties. Actual results may differ materially from historical expected or predicted results due to a variety of factors. Please refer to AMCO's SEC filings, including our statement on Form 10-K, to review these factors. With that, I'll turn it over to Ron.

Thanks, Tracy, and thanks, everyone, for joining us to discuss ANCOR's first half results for the 2020 financial year. As Tracy mentioned, with me here today is Michael Casimeno, ANCOR's chief financial officer, and we'll begin with some brief prepared remarks and then open the line for Q&A. Let's start with slide three in the presentation pack. Everything we do at ANCOR starts with safety, and so safety is where we begin these calls as well. For some time now, our role has been no injuries, and we're not there yet, but we continue to believe it's possible, and we see evidence of that with over 150 of our sites injury-free for six months or more, and our overall recordable case frequency rate for the half was 3.2 per million man-hours worked. The rate for the legacy AMCOR business during that period was 2.1, and we know from past experience that acquired businesses typically have higher numbers of injuries And this is no different with Bemis. So our primary focus this year remains on aligning Amcor safety practices across all of our sites and on building on the progress we made in the first six months where we had a 6% reduction in injuries across the company. We look forward to providing updates throughout the year as we drive towards eliminating all injuries. Moving to the five key messages we have for today on slide four. First, we've had a good first half with the business delivering solid earnings growth and strong cash flow. Second, taking into account the good first half performance, organic growth expectations for the rest of the year, and faster delivery of synergies, our outlook for constant currency EPS growth has improved to a range of 7% to 10% for the year. Third, integration of the Bemis business is progressing well, not only in relation to synergies, but also in terms of the organic earnings growth delivered by the business. as well as the opportunities we see to leverage our customer value proposition, which has been improved as a result of the combination. Fourth, we're continuing to lead the way at sustainability. We're uniquely positioned, fully committed, and taking action on multiple fronts. And then finally, our market positions and our exposure to defensive consumer segments leave us very well positioned to continue generating consistent returns for shareholders, regardless of macroeconomic conditions. Slide 5 provides a summary of the first half results where we delivered strong overall earnings growth, synergies at a faster pace than we had initially expected, and we returned a significant amount of cash to shareholders. Sales were generally consistent with what we saw in the first quarter. Sales revenue down 1.4% in constant currency terms and excluding the negative impact related to pass-through of lower input costs. Volumes grew modestly in our larger flexible packaging businesses in Europe and North America, and there was no volume impact on sales in rigid packaging. However, sales were lower in flexible Latin America, and especially cartons. EBIT was up 4.4% in constant currency terms, with 8% EBIT growth in the flexible segment, driven by mid-single-digit organic growth, plus synergy benefits of approximately $20 million. Earnings were lower in the rigid packaging segment, as we highlighted would be the case on our first quarter earnings call. EPS increased by 11% in constant currency terms, and the board declared a quarterly dividend of 11.5 cents per share. Pre-cash flow before dividends was strong, and we returned more than $600 million to shareholders through dividends and share repurchases during the half. Before handing over to Michael, who will cover the financials in some more detail, just a few words on the Bemis acquisition, looking at the next slide, slide six. First of all, the integration of the two businesses is progressing very well. The two legacy companies are functioning as one, and the excitement and the focus demonstrated by our employees has enabled the Flexibles business to simultaneously grow organically and to surpass the synergy targets we originally set for the first six months of the year. The response from customers has been very positive given ANCOR's enhanced global value proposition, which includes a broader and more sustainable product offering. Now, in terms of synergies, we delivered $30 million overall in the first half, which was ahead of our initial expectations and are mainly coming from overhead reductions and procurement benefits. We've increased our guidance for the current fiscal year from $65 million to $80 million in synergies, and we feel very confident in our ability to deliver the full $180 million by the end of fiscal 2022. The key takeaway today is that we feel very good about where we're at in terms of the integration and the delivery of strategies. I'll hand over to Michael now, and then I'll come back and talk about some of the, of course, longer-term opportunities.