Amcor plc

Ladies and gentlemen, thanks for standing by and welcome to the AMCOR full year 2023 results call. I would now like to turn the call over to Tracy Whitehead, Head of Investor Relations. Please go ahead.

Thank you, Mandeep, and thanks everyone for joining AMCOR's fiscal 23 earnings call. Joining today is Ron D'Elia, our Chief Executive Officer, and Michael Casamento, Chief Financial Officer. Before I hand over, let me note a few items. On our website, amcor.com, under the investor section, you'll find today's press release and presentation, which we will discuss on this call. Please be aware that we will also discuss non-GAAP financial measures and related reconciliations can be found in that press release and the presentation. Remarks will also include forward-looking statements that are based on management's current views and assumptions. The second slide in today's presentation lists several factors that could cause future results to be different than current estimates. Reference can be made to AMCOR's SEC filings, including our statements on Form 10-K and 10-Q for further details. Please note that during the question and answer session, we request that you limit yourself to a single question and one follow-up, and then rejoin the queue if you have any additional questions. Over to you, Ron.

Thanks, Tracy, and thanks everyone for joining Michael and myself today to discuss AMCOR's fiscal 2023 and June quarter results. We'll begin with some prepared remarks, starting as we always do with safety on slide three. Safety is our most important value at AMCOR, and throughout fiscal 2023, we again made strong progress on our journey for continuous safety improvement across the company. Sixty-nine percent of our sites remained injury-free for at least 12 months, and we reduced injuries globally by 31%. While we're pleased with these results, ultimately, it's not just the number of injuries we're focused on, but also the severity of the injuries that do occur. Tragically, in June, a contractor's employee lost his life at our Pondicherry site in India after falling from a roof. We immediately conducted a detailed investigation, and we're deploying the learnings across all ANCOR sites with the goal of eliminating the risk of similar accidents in the future. We're relentlessly focused on safety globally, and this tragic incident is a stark reminder of the importance of those efforts. Moving to our key messages on slide four. First, Amcor delivered solid operating performance for the 2023 fiscal year. Adjusted EBIT was up 1%, and we returned $1.2 billion to shareholders through share purchases and our industry-leading dividend. Across the organization, our teams demonstrated agility by taking action to navigate highly challenging and volatile market dynamics characterized by ongoing inflation, softening consumer demand, and customer destocking, particularly in the second half of the fiscal year. Our ability to modestly grow adjusted EBIT under these circumstances was the result of proactive and decisive actions to effectively manage the areas under our control, which is our second key message. Our teams did an excellent job prioritizing pricing to recover increases in raw materials and general inflation. And as we entered the 2023 calendar year, we stepped up the intensity of our cost reduction efforts to drive productivity benefits. Additionally, we invested in structural initiatives, including strategic plant closures that will deliver meaningful cost savings in fiscal 24 and 25. Third, as a result of these comprehensive actions, AMCOR is well positioned to return to solid mid single digit earnings growth in the second half of fiscal 24, which also leaves us well placed to grow at our long term trend of high single digit rates thereafter. While we expect current market conditions to persist over the near term for the entire industry, we'll continue to recover inflation and are confident the benefits from our cost reduction and productivity initiatives will have a sustainable positive impact on earnings leverage. Additionally, we'll be cycling weaker volume comparatives in the second half, and the headwinds we've faced from the sale of our Russian plants and significantly higher interest expense are largely limited to the first half of fiscal 24. All these known benefits are largely within our control and underpin our expectation of a return to solid earnings growth in the second half without having to rely on a significant change in the demand environment. And finally, as we and the entire CPG industry continue to navigate a dynamic operating environment, Amcor remains laser focused on executing against our long-term growth and value creation strategy. We're well positioned as a recognized industry leader, and we continue to pursue opportunities to invest in our strong underlying business, particularly through innovation and sustainability initiatives in faster growing higher value markets. We're also actively pursuing value creating M&A, such as the deal announced last week to acquire Phoenix flexible packaging in the high-growth Indian market. And we're committed to returning cash to shareholders through a compelling and growing dividend and share repurchases. Moving to slide five for a summary of our financial results. Fiscal 23 and June quarter financial performance was well within our May guidance range, as proactive cost and price actions helped counter ongoing inflation and increasingly soft and more volatile volumes as we progressed through the year. Reported net sales for the year were up 1 percent, which includes an unfavorable currency impact of 3 percent and approximately $775 million of pricing to recover higher raw material costs. Organic sales were flat on a comparable constant currency basis as volumes were 3 percent lower, offsetting a price-mix benefit of around 3 percent. Full-year adjusted EBIT of 1.6 billion was up 1% on a comparable constant currency basis, benefiting from strong operating leverage in the first half of the year and accelerated cost actions in the second half. Adjusted EPS of 73.3 U.S. cents per share was down 2% on a comparable constant currency basis. For the June quarter, sales were down 5%. Positive price and mix of approximately 2% included recovery of $100 million of general inflation, and volumes were at the lower end of our expected range, down 7%. Last quarter, we referenced accelerated demand weakness in March and April, and this persisted broadly through the June quarter due to a combination of lower consumer demand and continued customer destocking, including in priority categories, which also impacted mix compared with last year. While earnings were in line with our guidance, the June quarter is historically MCOR's strongest of the year, making it more difficult to flex costs. As a result, weaker volumes had a more pronounced impact on earnings, and adjusted EBIT of $436 million was 7% lower than the prior year on a comparable basis. We continue to execute well in our capital allocation priorities, returning approximately $1.2 billion of cash to shareholders during the year through a combination of dividends, which the Board increased to 49 cents per share, and the repurchase of approximately 41 billion shares, or 3% of shares outstanding, for a total cost of $431 million. Since 2020, we've repurchased approximately 11% of our outstanding shares, and our industry-leading dividend currently yields around 5%. Our overall financial profile also remains robust, with return on average funds employed at 15.4%. Slide 6 highlights the proactive actions we continue to take to manage the areas under our control. We've been successful in pricing for inflation throughout the year, passing through a total of $1.1 billion to compensate for higher raw materials and general inflation, including labor, energy, and freight. We also delivered more than $200 million in annual cost savings through productivity initiatives, including a reduction of more than 1,200 full-time employees. And we're investing in structural initiatives that will deliver approximately $35 million in savings, primarily in the second half of fiscal 24, with an incremental $15 million benefit in fiscal 25. And importantly, we expect the benefits from these fiscal 23 cost actions and structural initiatives to have an ongoing favorable impact on earnings leverage. I'll turn it over now to Michael to cover more of the financials.