Amcor sees best growth in eastern Europe




  February 20, 2007


GLOBAL packager Amcor is winding up its $1 billion asset sales program with
the likelihood of selling its PET packaging business in western Europe.


Amcor, whose interim net profit fell almost 42 per cent, sees more growth
in eastern Europe, especially in tobacco packaging, and today announced it
will build a new 12 million euro ($A20.1 million) tobacco packaging plant
in Ukraine.


Chief executive Ken Mackenzie said Amcor will look at divesting its PET
packaging operation in Europe while undertaking comprehensive restructuring
of the flexibles business.


He also announced that a new flexibles plant will be built in Poland for 26
million euro ($A43.56 million).


However, Mr Mackenzie would not give any more details on the plant but said
it was being established with the support of a large multi-national
customer.


He said that after the re-weighting of its European portfolio, western
European sales will fall to around 20 per cent by 2009, compared to 32 per
cent in 2005, with sales in the emerging eastern Europe rising to 20 per
cent compared to 12 per cent in 2005.


"Amcor has prioritised its growth opportunities and has decided that it is
not able to fund its global growth plans and also lead the European PET
consolidation process through acquisition," Mr Mackenzie said.


"Therefore, we have decide to sell part, or all, of the European PET
business."


Over the past 12 months, Amcor has shut down 10 plants while pocketing $420
million through the sale of other businesses, including its Australasian
PET operations and Asian corrugated plant, in a fix, sell or close
strategy.


Mr Mackenzie said the proceeds from its asset sales were being reinvested
with new projects in eastern Europe as well as customer PET containers in
North America and some segments in Australasia.


The bottle and carton maker, which has been battling rising raw material
costs, strong competition and a high Australian dollar which is favouring
importers, today posted a net profit of $117.7 million for the first half,
down 41.7 per cent.


Its net profit before significant items - which included the cost of
restructuring its Australian fibre packaging business and rationalisation
in the flexibles market sector - fell 13.7 per cent to $185 million for the
six months to December 31, 2006.


The domestic business was hit by Cyclone Larry, which devastated the banana
crop in northern Queensland, the frost and hail that damaged fruit in the
Yarra Valley in Victoria, and the loss of business from New Zealand dairy
giant Fonterra.


The fibre packaging business suffered a 4 per cent fall in volume for the
half, with 3 per cent of the drop attributed to Cyclone Larry.


Mr Mackenzie said group earnings for the second half were expected to be
higher than the previous corresponding period even though input costs such
as aluminium foil and resin are likely to be higher than a year ago.


"It's likely that earnings for the second half will be higher for the same
period last year, but not substantially,'' Mr Mackenzie said.


Amcor declared an unfranked interim dividend of 17c, compared to a
partly-franked 17c in the previous corresponding period.


Amcor shares weakened 7c to $7.33 imn early afternoon trading.