Amcor plc

Results of Operations - Three Months Ended March 31, 2024

Consolidated Results of Operations

Net sales decreased by $256 million, or 7%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Excluding the positive currency impacts of $33 million, the negative impacts from the pass-through of lower raw material costs of approximately $60 million, the remaining variation in net sales for the three months ended March 31, 2024 was a decrease of $228 million, or 6%. This reflects sales from acquired businesses of approximately 1%, an unfavorable price/mix impact of approximately 3%, and approximately 4% lower sales volumes.

Net income attributable to Amcor plc increased by $10 million, or 6%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, mainly due to an increase in gross profit of $19 million with lower restructuring and related expenses, net, of $20 million, offset by higher selling, general, and administrative expenses of $13 million, higher net interest expense of $8 million, and higher income tax expenses of $6 million.

Diluted earnings per share ("Diluted EPS") increased by $0.010, or 8%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, with the net income available to ordinary shareholders of Amcor plc increasing by 6% due to the above items and the diluted weighted average number of shares outstanding decreasing by 2%. The decrease in the diluted weighted average number of shares outstanding was largely due to the repurchase of shares under previously announced share buyback programs.

Segment Results of Operations

Flexibles Segment

Net sales decreased by $189 million, or 7%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Excluding the positive currency impacts of $22 million, the negative impacts from the pass-through of lower raw material costs of approximately $50 million, the remaining variation in net sales for the three months ended March 31, 2024 was a decrease of $160 million, or 6%, reflecting an unfavorable price/mix impact of approximately 4% and approximately 2% lower sales volumes primarily due to greater volume weakness in relatively higher value healthcare categories.

Adjusted earnings before interest and tax ("Adjusted EBIT") increased by $21 million or 6% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Excluding positive currency impacts of approximately $3 million, the remaining increase in Adjusted EBIT for the three months ended March 31, 2024, was $17 million, or 5%, driven by favorable operating cost performance more than offsetting the unfavorable volume and price/mix impacts.

Rigid Packaging Segment

Net sales decreased by $67 million, or 8%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Excluding the positive currency impacts of $10 million and the negative impact from the pass-through of lower raw material costs of approximately $10 million, the remaining variation in net sales for the three months ended March 31, 2024 was a decrease of $68 million, or 8%, reflecting approximately 8% lower sales volumes.

Adjusted EBIT increased by $2 million, or 3%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Excluding the positive currency impacts of $1 million, the remaining variation in Adjusted EBIT for the three months ended March 31, 2024 was an increase of $1 million, or 1%. This growth reflects favorable operating cost performance which more than offset the unfavorable volume performance.

Consolidated Gross Profit

Gross profit increased by $19 million, growing 3%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily driven by the impact of cost savings initiatives, which also drove an increase in gross profit as a percentage of sales to 20.3% for the three months ended March 31, 2024.

Consolidated Restructuring and Other Related Activities, Net

Restructuring and other related activities, net, decreased by $20 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The change was a result of a decrease in restructuring and related expenses, net, of $20 million, primarily related to the 2023 Restructuring Plan.

Consolidated Income Tax Expense

The provision for income taxes for the three months ended March 31, 2024 and 2023 is based on our estimated annual effective tax rate for the respective fiscal years which is applied on income before income taxes and equity in loss of affiliated companies, and adjusted for specific items that are required to be recognized in the period in which they are incurred.

The effective tax rate for the three months ended March 31, 2024 increased by 1.4 percentage points compared to the three months ended March 31, 2023, primarily due to the difference in the magnitude of discrete events in both periods.

Results of Operations - Nine Months Ended March 31, 2024

Consolidated Results of Operations

Net sales decreased by $916 million, or 8%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. Excluding the positive currency impacts of $186 million, the negative impacts from the pass-through of lower raw material costs of approximately $145 million, and the negative impact from the disposed Russian business of $156 million, the remaining decrease in net sales for the nine months ended March 31, 2024 was approximately $800 million, or 7%, reflecting approximately 7% lower sales volumes.

Net income attributable to Amcor plc decreased by $395 million, or 46%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. This is mainly due to the non-recurrence of the pre-tax net gain of $215 million on disposal of the Russian business in the nine months ended March 31, 2023, a decrease in other income/(expenses), net of $57 million, lower gross profit of $45 million, higher net interest expense of $43 million, and an increase in restructuring and related expenses, net, of $29 million.

Diluted earnings per share decreased by $0.254, or 44%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023, with the net income available to ordinary shareholders of Amcor plc decreasing by 45% due to the above items and the diluted weighted average number of shares outstanding decreasing by 3% for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. The decrease in the diluted weighted average number of shares outstanding was largely due to the repurchase of shares under previously announced share buyback programs.

Segment Results of Operations

Flexibles Segment

Net sales decreased by $732 million, or 9%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. Excluding the positive currency impacts of $158 million, the negative impacts from the pass-through of lower raw material costs of approximately $140 million, and the negative impact from the disposed Russian business of $156 million, the remaining variation in net sales for the nine months ended March 31, 2024 was a decrease of approximately $590 million, or 7%, mainly reflecting unfavorable sales volumes of approximately 7%, mainly reflecting lower market and customer demand and destocking particularly through the first half of the year.

Adjusted EBIT decreased by $51 million, or 5%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. Excluding positive currency impacts of $16 million and the negative net impact from the disposed Russian business of $50 million, the remaining decrease in Adjusted EBIT for the nine months ended March 31, 2024, was $17 million, or 2%, reflecting the net negative effect of 1% from unfavorable volumes and favorable operating cost performance, and net negative price/mix of 1%.

Rigid Packaging Segment

Net sales decreased by $184 million, or 7%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. Excluding the positive currency impacts of $28 million and the positive impact from the pass-through of lower raw material costs of approximately $5 million, the remaining variation in net sales for the nine months ended March 31, 2024 was a decrease of $207 million, or 8%. This reflects favorable price/mix benefits of approximately 1% and unfavorable sales volumes of approximately 9%.

Adjusted EBIT decreased by $8 million, or 4%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. Excluding the positive currency impacts of $3 million, the remaining variation in Adjusted EBIT for the nine months ended March 31, 2024 was a decrease of $11 million, or 6%, reflecting the net negative effect of 15% from unfavorable volumes and favorable operating cost performance, partly offset by favorable price/mix of 9%.

Consolidated Gross Profit

Gross profit decreased by $45 million, or 2%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. The decrease was primarily driven by the impact of the disposed Russian business and lower volumes. Gross profit as a percentage of sales increased to 19.4% for the nine months ended March 31, 2024, driven by an improvement in operating cost performance.

Consolidated Restructuring and Other Related Activities, Net

Restructuring and other related activities, net, changed by $244 million for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023. The change was mainly a result of a pre-tax net gain of $215 million on the disposal of the Russian business in the nine months ended March 31, 2023, and an increase in restructuring and related expenses, net, of $29 million, primarily related to the 2023 Restructuring Plan.

Consolidated Other Income/(Expenses), Net

Other income/(expenses), net changed by $57 million, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023, primarily from the adverse impact of the devaluation of the Argentine Peso.

Consolidated Interest Expense

Interest expense increased by $39 million, or 17%, for the nine months ended March 31, 2024, compared to the nine months ended March 31, 2023, driven primarily by increased variable interest rates.

Consolidated Income Tax Expense

The provision for income taxes for the nine months ended March 31, 2024 and 2023 is based on our estimated annual effective tax rate for the respective fiscal years which is applied on income before income taxes and equity in loss of affiliated companies and adjusted for specific items that are required to be recognized in the period in which they are incurred.

The effective tax rate for the nine months ended March 31, 2024 increased by 5.7 percentage points compared to the nine months ended March 31, 2023, primarily due to the difference in the magnitude of discrete events in both periods, mainly driven by tax benefits attributable to the disposal of the Russian business in the nine months ended March 31, 2023.