Amcor targets $1.8B–$1.9B free cash flow and 12–17% EPS growth in fiscal 2026 with $650M synergy plan

Earnings Call Insights: Amcor plc (AMCR) Q4 2025

MANAGEMENT VIEW

* CEO Peter Konieczny highlighted the completion of the Berry Global acquisition, stating, “We completed the acquisition of Berry Global and are now 100 days into combining 2 complementary businesses, and transforming Amcor’s ability to create value for our customers and shareholders.” He emphasized expectations for “strong adjusted EPS growth of 12% to 17% in fiscal '26, with free cash flow expected to double to $1.8 billion to $1.9 billion.”
* Konieczny noted, “Synergy realization is tracking to plan, and we remain confident in delivering $650 million in total synergies through fiscal '28, including $260 million in fiscal '26.” He also announced a strategic review, identifying businesses less aligned with the core portfolio, including the $1.5 billion North America beverage business, for which “we will explore alternatives to maximize value.”
* CFO Michael John Casamento stated, “Annual adjusted free cash flow of $926 million was within the guidance range provided in April. CapEx for the year was $580 million, up from last year, driven primarily by the addition of Berry for the 2 months.” He added, “We anticipate capital spending in the range of $850 million to $900 million in fiscal '26.”

OUTLOOK

* Amcor projects adjusted earnings per share of $0.80 to $0.83 for fiscal 2026, “representing strong year-over-year growth between 12% and 17%.”
* Free cash flow is expected to be “$1.8 billion to $1.9 billion in FY '26, which is after deducting approximately $220 million of cash integration and transaction costs.”
* The company anticipates “broadly flat volumes for FY '26,” and expects “approximately 42% to 45% of earnings will be delivered in the first half, with more weighting to the second half, particularly Q4 as our synergy run rate will build through the year.”
* For Q1, guidance is for EPS “between $0.18 and $0.20 per share, including approximately $35 million to $40 million of pre-tax synergies.”

FINANCIAL RESULTS

* Q4 saw a “step-up to a high level of quarterly net sales EBITDA and EBIT for Amcor” due to two months of Berry contribution.
* Flexibles segment volumes were down approximately 1.5%, with “net sales increased by 18% on a constant currency basis, primarily driven by the acquisition of Berry along with favorable price/mix trends.” Adjusted EBIT was $450 million, up 11% on a constant currency basis, with a margin of 14.1%.
* Rigid Packaging Solutions segment net sales increased by 121% on a constant currency basis, driven by Berry. Adjusted EBIT was $204 million, up 173% on a constant currency basis, with a margin of 10.9%.
* North American beverage business underperformed due to “operating challenges at high-volume sites, which resulted in elevated costs through the quarter.” EBIT for this segment declined by approximately $20 million year-over-year.
* Leverage was reported at 3.5x, with expectations to reduce this to “approximately 3.1 to 3.2x over the next 12 months.”

Q&A

* Matthew Burke Roberts, Raymond James: Asked about the impact of North American beverage business divestment on procurement synergies. Peter Konieczny responded, “The potential divestment of the North American beverage business will not have a material impact on our ability to generate the procurement savings… we believe that the procurement savings that we're estimating… are not materially impacted.”
* George Leon Staphos, Bank of America: Inquired about ongoing volume weakness despite market share gains. Konieczny explained, “Fourth quarter came in a little softer than what we expected… really the weakness in North America that drove it. Both businesses have seen similar trends.” On value-based pricing, he said, “We believe that the value-based pricing that Amcor has worked on for many years… is an opportunity for us to look carefully at pricing across the Berry portfolio.”
* Anthony James Pettinari, Citi: Requested more detail on the $1 billion of non-core businesses. Konieczny described, “We're talking about 10 businesses that make up the $1 billion… where businesses failed one or a combination of these criteria, we put them aside and that makes now up for the 10 plus… North American beverage.”
* Arun Shankar Viswanathan, RBC: Asked about the timeline and drivers for the $260 million in synergies. CFO Casamento clarified, “$240 million of it is cost… and about $20 million… in financial synergies… The $260 million obviously is pre-tax. So from an EPS standpoint, it's about $0.09.”
* Ramoun Lazar, Jefferies: Sought quantification of North American beverage operational issues. Konieczny and Casamento confirmed, “The business was down in North America beverage primarily around $20 million.”
* Michael Andrew Roxland, Truist: Asked about volume assumptions in guidance. Casamento replied, “Volumes are going to be flat. So you're not going to see much revenue growth on that front.”

SENTIMENT ANALYSIS

* Analysts pressed management on divestiture strategy, synergy realization, and operational issues, with a slightly negative tone reflecting skepticism on volume trends and North America segment challenges.
* Management maintained a confident stance in both prepared remarks and responses, repeatedly reaffirming synergy targets and strategic actions, using language such as “we remain confident” and “we are excited about the opportunities ahead.”
* Compared to the previous quarter, analysts’ questioning was more focused on operational risks and execution, while management’s tone remained consistent, emphasizing discipline and execution.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter marked the first full period with Berry Global integration, shifting focus to near-term synergy capture and portfolio optimization, whereas the previous quarter was centered on closing the acquisition and initial guidance.
* Guidance language evolved from “clear visibility to significant EPS growth of approximately 12% through delivery of $260 million of synergies alone” to reaffirming specific EPS and free cash flow targets for fiscal 2026.
* Analysts this quarter focused more on divestiture details and operational issues, especially in North America beverage, compared to prior questions about integration and synergy timing.
* Management’s tone and confidence in synergy realization and portfolio review remained consistent, but with more detailed disclosure regarding underperforming segments and mitigation plans.

RISKS AND CONCERNS

* Management highlighted ongoing “operating challenges at a few high-volume sites” in North America beverage, leading to higher costs and underperformance.
* The company is “not factoring in a meaningful rebound in consumer demand,” reflecting caution amid ongoing macroeconomic uncertainty and tariffs.
* Portfolio optimization includes plans to divest or restructure $2.5 billion in non-core businesses, with no definite timeline for completion but the intention to stabilize performance before any divestment.
* Analysts expressed concerns about the pace of operational recovery and the ability to achieve synergy targets if volume trends remain subdued.

FINAL TAKEAWAY

Amcor management underscored that the integration of Berry Global is progressing well, with synergy realization and portfolio optimization driving expectations for strong adjusted EPS and free cash flow growth in fiscal 2026. The company is confident in delivering at least $260 million in synergies during the year and continues to address operational challenges in North America beverage, while maintaining a disciplined approach to portfolio management and deleveraging. Management reiterated their commitment to long-term shareholder value creation through focused execution and strategic action.

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

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