Amcor outlines at least $260M synergy benefit for FY26 as integration momentum builds

Earnings Call Insights: Amcor plc (AMCR) Q1 2026

MANAGEMENT VIEW

* CEO Peter Konieczny opened the call highlighting the company's first full quarter as a combined entity post-Berry acquisition, stating, “We are also seeing strong and consistent validation by our customers, who are very receptive to our expanded offerings and innovation capabilities.” Konieczny noted, “Margins increased in both operating segments, and we are addressing identified noncore assets to enhance focus on our core business.”
* Konieczny emphasized that adjusted EPS reached $0.193 per share, an 18% increase over the previous year, driven by synergy realization and disciplined cost management. He reiterated confidence in at least $260 million in synergy benefits for fiscal 2026 and a target of $650 million through fiscal 2028. He also announced agreements to sell two noncore businesses for approximately $100 million and an increase in Amcor’s quarterly dividend to $0.13 per share.
* CFO Michael Casamento stated, “Net sales increased 25% on a constant currency basis, primarily driven by the Berry acquisition. On a comparable basis, net sales were down 2%, with favorable price/mix dynamics offset by a 2.8% decline in volumes.” Casamento also reported, “Adjusted EBIT rose 28% on a constant currency basis to $426 million, driven primarily by approximately $75 million in acquired earnings net of divestments.”

OUTLOOK

* Amcor reaffirmed its fiscal 2026 guidance for adjusted EPS in the range of $0.80 to $0.83 per share, representing 12% to 17% year-over-year growth. Management stated this growth is not contingent on improvements in the macroeconomic environment or end customer demand.
* For the December quarter, the company guided to EPS of $0.16 to $0.18 per share, including $50 million to $55 million of synergy benefits. Casamento highlighted that “earnings phasing is expected to be consistent with Amcor’s historical performance with approximately 55% of EPS being delivered in H2.” Free cash flow guidance remains at $1.8 billion to $1.9 billion for the fiscal year, after funding $220 million in integration and transaction costs.

FINANCIAL RESULTS

* Adjusted EPS for Q1 was $0.193 per share. EBIT for the quarter was $687 million, up approximately 4% on a comparable basis, with reported EBIT margin at 12%—a 110 basis point increase over last year.
* Free cash outflow for the quarter was $343 million, reflecting a year-over-year improvement of more than $160 million prior to acquisition-related costs. CapEx for the quarter was $238 million, primarily due to the Berry acquisition. Leverage ended the quarter at 3.6x, with expectations to fall to 3.1x to 3.2x by year-end, including proceeds from asset sales.

Q&A

* Ghansham Panjabi, Baird: Asked about the Flexibles business volume decline and whether it was driven by consumer affordability or order distortions. Konieczny responded, “We expected the volumes to be very similar to Q4, and that’s exactly where they were… The Flexibles weakness really that we’ve seen is in Europe… the unconverted film category was weak, essentially following really general market softness.”
* Ramoun Lazar, Jefferies: Inquired about North American beverage volumes and divestment progress. Konieczny noted operational improvements and stated, “We are pushing ahead ambitiously to find strategic alternatives for that business… including joint ventures or also partnerships.”
* Anthony Pettinari, Citi: Asked about volume performance in high-growth categories. Konieczny explained, “The focus categories… performed better than the overall business… health care would have been in line with the prior year, Beauty and Wellness was down sort of low single digits.”
* John Purtell, Macquarie: Queried cost and productivity contributions to EBIT growth. Casamento stated, “The team is really focused on the cost side of things… We worked really hard to flex the cost base accordingly… and of course, you had the synergy delivery as well.”
* George Staphos, BofA: Requested more color on synergy benefits, especially in LatAm and specialty containers. Konieczny described synergy momentum and highlighted, “In Latin America, it was a Beauty and Wellness customer… combining an Amcor Rigid container with a Berry closure.”
* Jeffrey Zekauskas, JPMorgan: Asked about raw material cost savings and volume including North American beverage. Casamento broke down synergies, “Of the $33 million, about 2/3 of that was G&A… procurement side, again, it was 1/3.” Konieczny clarified, “Rigid overall, excluding North American Beverage, was a point down. If you rolled North American beverage in there, it’s 2.5%.”

SENTIMENT ANALYSIS

* Analysts pressed management on volume softness and the outlook for key categories, with a slightly cautious tone around demand trends and the pace of noncore asset divestments.
* Management was confident and assertive, frequently reaffirming guidance and synergy targets. Konieczny stated, “We are confident in delivering at least $260 million in synergies this year and $650 million in total through fiscal '28.” During Q&A, responses remained detailed and focused on execution.
* Compared to the previous quarter, management’s tone is more confident, particularly regarding synergy realization and cost control. Analyst questions reflected ongoing caution but acknowledged operational improvements.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for EPS and free cash flow was reaffirmed in both quarters. The current quarter saw an increase in confidence around synergy delivery and faster progress on noncore asset sales, with $100 million in agreements already reached.
* Strategic focus shifted to delivering revenue synergies and integrating Berry, with early commercial wins and pipeline growth highlighted in the current call. Management’s tone moved from cautious optimism to stronger confidence, while analysts maintained a consistent focus on volume trends and operational execution.
* The current quarter features concrete results from synergy capture and cost management, compared to a more tentative outlook last quarter due to integration risks and operational challenges in North American beverages.

RISKS AND CONCERNS

* Management acknowledged volume declines in specific categories and continued softness in the European Flexibles business, particularly unconverted film.
* The North American beverage segment remains a noncore asset with ongoing efforts to stabilize performance and explore divestment alternatives.
* Casamento noted, “We continue to expect capital spending in the range of $850 million to $900 million for fiscal 2026, with depreciation expected to slightly exceed CapEx.” Leverage remains elevated but is expected to improve.
* Analyst concerns centered on volume declines, market share shifts, and the timing and impact of asset divestitures.

FINAL TAKEAWAY

Amcor’s first full quarter post-Berry acquisition demonstrates firm progress in synergy realization, disciplined cost management, and focused portfolio optimization. Management reaffirmed guidance for EPS growth and free cash flow, underpinned by synergy benefits largely within their control. The company highlighted early wins from its expanded product suite and cross-selling opportunities, while also executing on the sale of noncore assets. Leadership transitions, including the impending CFO change, are being managed to maintain strategic momentum. Amcor remains confident in its ability to deliver strong financial performance and long-term value as integration advances and synergy benefits accelerate.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/amcr/earnings/transcripts]

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