Amcor Sun, 21 Apr 2019 02:13:14 +0300 <![CDATA[Report: Bemis not in deal talks with Amcor]]> Wed, 27 Sep 2017 18:44:52 +0300 <![CDATA[Bemis (BMS) Gains on Reports of Amcor's Acquisition Bid]]> Per a Bloomberg report, packaging products-maker Bemis Company Inc. BMS is the takeover target of Australian company, Amcor Limited. Following the report, Bemis’ shares surged 10% to close at $46.90 on Sep 7.
Amcor is working with advisers in order to prepare a bid for Neenah, WI-based Bemis, which has a current market capitalization of $4.47 billion. The company offers multilayer polymer, blown and cast film structures as well as injection molded plastic and folding carton packaging products. Its products are utilized in producing packaging for food, medical, pharmaceutical, personal care, electronics, and industrial applications. It sells its products through direct sales force in North America, Latin America, Europe, and Asia-Pacific.
Is Bemis Worth a Takeover Bid?
Bemis’s recent results were nothing to write home about. In the first half of 2017, the company’s earnings declined 17%. In both the quarters of 2017, Bemis’ earnings failed to match the Zacks Consensus Estimate. In the trailing four quarters, the company has posted a negative average earnings surprise of 5.89%. During second-quarter conference call, Bemis lowered 2017 adjusted earnings per share guidance range to $2.35-$2.50 from the prior range of $2.50-$2.60, citing the impact of sharp contraction and tough economic environment in Brazil. The mid-point of the guidance reflects a year-over-year decline of 10%.
The estimates for third-quarter 2017, fiscal 2017 and fiscal 2018, have moved south in the past 30 days, reflecting the negative outlook of analysts. For the third quarter, the estimate has gone down 11% to 64 cents per share. For fiscal 2017, the estimate has dipped 6% to $2.40 in the past 30 days. For fiscal 2018, the estimate has gone down 6% to $2.67 per share.

During March, certain of Bemis’ large U.S. core consumer packaged goods customers lowered volume projections for the balance of 2017. These lower volumes, along with the operational inefficiencies associated with the lower volumes, will impact Bemis’ sales and earnings for 2017. Further, the political instability and challenging economic environment in Brazil continues to impact business.
In June, Bemis announced details about its restructuring and cost savings plan to improve profitability, primarily in the U.S. and Latin American businesses by reducing manufacturing and administrative cost structure. These efforts are likely to generate total cost savings of $55–$60 million, with savings starting in 2017 and fully realized during 2019.

In the past year, its shares have declined 4.5% in contrast with 9.3% rise recorded by the industry. The company continues to bear the brunt of a flat-to-declining U.S. packaged food market. In eight of the past nine years, volumes in the core flexible packaging business have been flat to down as Bemis continues to struggle within a complex supply chain. The stock price underperformance could make shareholders welcome an offer by Amcor.
Bemis is currently trading at a forward 12-month Enterprise Value/ EBITDA (EV/EBITDA) ratio of 10.3 while the industry’s 12-month forward EV/EBITDA ratio is pegged higher at 12.4. This implies that the stock is cheap at current levels.
Manifold Benefits to Amcor
Amcor Limited provides packaging solutions in Western Europe, North America, Australia, New Zealand, and internationally. The company manufactures rigid plastic containers for a range of beverage and food products. It also manufactures flexible and film packaging for the food and beverage industry as well as pet food packaging; and medical and pharmaceutical, fresh produce, and snack food segments. The company also offers flexible packaging for specialty folding cartons for tobacco packaging and other industries; and packaging solutions for home and personal care products.
If the takeover happens, it, would make Amcor the world's fourth-biggest packaging company surpassing can maker Ball Corporation BLL but behind big three paper and pulp businesses — International Paper Company IP, WestRock Company and Oji Holdings Corporation. The transaction would be in sync with the Amcor’s long endeavor to shift from metal and glass to plastics. Further, Bemis would increase exposure to the Americas from around a third of revenues to more than half. 
Bemis currently carries a Zacks Rank #4 (Sell). A better-ranked stocks in the same space includes  Avery Dennison Corporation AVY which flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Avery Dennison Corporation has an estimated long-term earnings growth rate of 7%.
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Zacks Investment Research]]> Mon, 11 Sep 2017 19:08:00 +0300
<![CDATA[MacKenzie's Special Sauce Could Make BHP Taste Better]]> Fri, 16 Jun 2017 12:50:45 +0300 <![CDATA[Amcor зафиксировала снижение полугодовой прибыли]]> Mon, 13 Feb 2017 18:13:00 +0300 <![CDATA[Amcor зафиксировала снижение полугодовой прибыли]]> Mon, 13 Feb 2017 13:36:20 +0300 <![CDATA[Sonoco to Divest Rigid Plastics Blow Molding Operations]]> The maker of consumer and industrial packaging products, Sonoco Products Co. SON has entered into a definitive agreement to sell its rigid plastics blow molding operations to Amcor, an Australian packaging company, for $280 million. The transaction is subject to regulatory approvals in the U.S.

Sonoco’s rigid plastics blow molding operations manufacture moulded packaging for food, drink and pharmaceuticals. These operations include 7 manufacturing facilities in the U.S. and Canada with 850 employees.

This divestiture will help Sonoco to focus on its consumer packaging portfolio. The company will also be able to further the expansion of its targeted growth businesses after the sale. These businesses include flexible packaging, thermoforming rigid plastics and temperature-assurance packaging for transporting pharmaceuticals, biologics and vaccines.

Sonoco’s Consumer Packaging segment includes a broad range of cost-reduction projects, high-value flexible packaging enhancements, rigid plastic containers technology and next-generation composite packaging. During 2015, the company initiated restructuring actions in this segment comprising the closure of six rigid paper facilities, the closure of a production line at a thermoforming plant in the U.S., and the sale of a portion of its metal ends and closures business in the U.S.

Further restructuring actions will drive growth. Sonoco also remains focused on offsetting current economic, market and currency headwinds by further optimizing its supply chain, driving productivity improvements and streamlining its cost structure.

Sonoco currently has a Zacks Rank #3 (Hold).

Better-ranked stocks in the sector include Berry Plastics Group, Inc. BERY, Packaging Corporation of America PKG and ACCO Brands Corporation ACCO. While Berry Plastics sports a Zacks Rank #1 (Strong Buy), Packaging Corporation of America and ACCO Brands carry a Zacks Rank #2 (Buy).

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Zacks Investment Research]]> Fri, 02 Sep 2016 15:31:00 +0300
<![CDATA[Австралия: Amcor зафиксировала 6,7%-ный рост полугодовой прибыли]]> Amcor, одна из крупнейших в мире упаковочных компаний, зафиксировала 6,7%-ный рост полугодовой прибыли. Так, чистая прибыль в первом полугодии увеличилась с $301,1 млн годом ранее до $321,3 млн.

]]> Tue, 17 Feb 2015 09:24:32 +0300
<![CDATA[Searching For Earnings Quality In Asia]]> Asian companies will start reporting full-year earnings soon, so we decided to find some that are likely to have sustainable and strong results – as well as some that may suffer from poor earnings quality. The StarMine Earnings Quality model consists of three components: accruals, cash flow and operating efficiency. We chose an even half dozen – three that may be winners and three that may be also-rans.

Poor Earnings Quality

000816.SZ : JiangSu Jianghuai Engine Co Ltd : Machinery : Earnings Quality Model Score : 1

With China taking a serious look at controlling air pollution, small engine manufacturers like JiangSu Jianghuai could face some pressures. The company manufactures diesel and gasoline engines and scored the poorest possible Earnings Quality model score of 1 indicating that earnings may not be coming from sustainable sources.

One sign of poor earnings quality is negative free cash flows. JaingSu has seen negative free cash flow in six of the last seven quarters as it has spent more on capital expenditures than it has earned from operations. That is not sustainable in the long term. Another measure of earnings quality is operating efficiency: Jiangsu has seen trailing net operating assets at the lowest point in five years, a sign that the company may not be maximizing its assets’ potential.


Source: Thomson Reuters Eikon/StarMine

Inventory piling up

JiangSu is also experiencing weakening inventory days. As you can see in the chart above, inventory days have been on the rise, and in the last quarter, inventory days was at 103 days, the highest level in more than five years. Rising inventory days could lead to obsolescence and could indicate poor inventory management.

1590.TW: Airtac International Group: Machinery : Earnings Quality Model Score : 9

This Taiwan-based valve and pump manufacturer is grappling with falling return on net operating assets and poor cash flows, both signs of poor earnings quality. Airtac has opened a new site in Taiwan and has seen operating expenses increase as a result. While that may help earnings in the future, for now the StarMine Earnings Quality Score of 9 puts it in the bottom decile of all companies in the region and leads us to believe that earnings are not coming from sustainable sources.

Asia 1

Source: Thomson Reuters Eikon/StarMine

Wealth erosion ahead?

As you can see in the chart above, the company has had negative or weak free cash flows consistently over the past five years. When free cash flows lag net income and are negative, it is a sign of poor earnings quality. Part of the reason for the poor cash flows could be the new plant opening in Taiwan, but studies have shown that spending on capital expenditures when return on net operating assets are falling could lead to wealth erosion. For Airtac, RNOA is at 18.7%, almost half of what it was just four years ago. That weakness is driven by weak asset turnover, which has also been falling in the same period. It’s a sign that the company may not be using assets efficiently.

LTG PM: Lt Group Inc: Beverages : Earnings Quality Model Score : 1

LT Group is a Philippines-based beverage company that recently forayed into banking. The company seems to have poor earnings quality based on rising inventory, falling margins, poor free cash flows, and large non-operating income, all contributing to the worst possible Earnings Quality (EQ) model score of 1. LT Group is also in the business of selling cigarettes, which were under scrutiny by the taxman. In addition, a new tax code on cigarette sales is likely to be a drag on future earnings. The company’s new banking arm also seems to be a drag on earnings and analysts continue to lower earnings estimates.

Asia 2

Source: Thomson Reuters Eikon/StarMine

Smoking and drinking

As the cigarette and beverage businesses have become more competitive and price wars have broken out, operating profit margins have fallen over the last three years to 9.7% from 12.8%, and over the last four quarters that trend has continued. In the last quarter, trailing 4Q operating margins was just 0.1% and that trend is not sustainable. It’s a big reason why LT Group scores so poorly on the operating efficiency component of the EQ model. The foray into banking has not yet panned out for LT Group as can be seen by analyst pessimism.

Strong Earnings Quality

AMC.AX: Amcor Limited : Container & Packaging : Earnings Quality Model Score : 98

This Australia-based packaging company has been firing on all cylinders. As oil prices fall, the consumer has more disposable income to spend on food and drink, and Amcor is in the business of packaging that food, which means a potential increase in business. The company already is displaying signs of good earnings quality with strong cash flows and improving margins, and the StarMine Earnings Quality model score of 96 leads us to believe that these earnings are likely to be sustainable going forward. Let’s look at the signs of strong earnings quality.

Asia 3

Source: Thomson Reuters Eikon/StarMine

Arrows pointing upward

Not only has net income been increasing in each of the last three years but free cash flow has also been rising. In the fiscal year ending June 2014, Amcor reported record free cash flow of A$829 million, far exceeding the net income of A$565 million. In the last semiannual period, free cash flow was the highest in four years at A$730 million. Earnings supported by strong cash flows tend to be more sustainable in the future. Operating profit margins reached a 10 year high of 10.1%, and falling oil prices (a key material input) is likely to improve those margins.

Consequently, return on net operating assets, which measures the company’s operating efficiency, is also at a five-year high at 16.7%, much higher than the 6.5% it was in June 2007. All these factors lead to a high StarMine Earnings Quality model score of 98, a sign that these strong earnings are coming from sustainable sources.

HROM.NS: Hero Motocorp Ltd: Automobiles : Earnings Quality Model Score : 99

Hero Motocorp was recently in the news for a big endorsement deal with Tiger Woods worth millions, and it seems like it can afford that. The company is one of the largest motorcycle manufacturers in India. Until recently it had a joint venture with Honda and demand for bikes continues to be strong. Revenues and earnings have more than doubled in the last seven years, and those earnings seem likely to remain sustainable based on a strong Earnings Quality score of 99.

Asia 4

Source: Thomson Reuters Eikon/StarMine

Look for sustainable earnings

As you can see in the chart above, as net income has increased over the last five years, so has cash flow from operations. In fact, in the last year ending March 2014, net income was an impressive Rs. 21 billion, but even more impressive is that cash flow from operating was even higher at Rs. 30 billion. Earnings backed by strong cash flows tend to be sustainable going forward. Return on net operating assets is at an impressive 97%, close to all time highs, and that efficiency is being driven by asset turnover which is at a record high. That means that Hero Motocorp is using its assets efficiently to generate returns and is another sign of strong earnings quality. Now if only Tiger could get back to his old glory days and justify the group’s faith in him!

047810 KS: Korea Aerospace Industries Ltd : Aerospace & Defense : Earnings Quality Model Score : 91

This Korean military and civilian aircraft manufacturer is seeing a surge in new orders and especially strong demand for its next generation KFX fighter jet. Already the company is showing signs of strong earnings quality with improving operating efficiency and strong cash flows. On the domestic front, the company has an 11-year backlog for its aerospace unit, which exceeds even Airbus and Boeing and could lead to strong profits.

Asia 5

Source: Thomson Reuters Eikon/StarMine

Good order pace

Despite the growing order book, the KAI has done a good job of managing inventories. The latest inventory days were at 76, the lowest level in the company’s history. That reduces the risk of obsolescence in this fast-paced industry. Another positive for KAI is improved efficiency over the past four quarters. At 14.9%, trailing 4Q RNOA is at an all time high. With a new partnership to develop helicopters, the management team is doing all it can to diversify its product offerings while at the same time ensuring efficiency. With earnings coming from sustainable source, it looks like KAI earnings may be on an upward trajectory.


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