アムコア（AMCR）2026年度第4四半期決算説明会：EPSは23%増加、シナジー効果は2億8500万ドルに達する

主要なポイント

• アムコアが発表した2026年度第4四半期の調整後EPSは1.23ドルとなり、前年同期比で23%増加し、経営陣の予想範囲の上限となりました。通期の調整後EPSは13%増の4.02ドルとなりました。
• 四半期売上高は64億ドルに達し、調整後EBITDAは10億4500万ドル、調整後EBITは合計8億3600万ドルとなりました。業績は、買収したベリーの収益、シナジーの取り込み、およびコスト管理の成果による支援を受けました。
• 既存事業の出荷量は緩やかなプラス成長に転じ、前四半期比で約200ベーシスポイント改善しました。軟包装部門の出荷量は約1%増加し、硬質包装部門の出荷量は約0.5%増加しました。
• 2026年度のシナジー創出額は合計2億8500万ドルとなり、初年度の当初予想を約10%上回りました。アムコアは3年間で6億5000万ドルというシナジー目標を維持しました。
• 経営陣は、2026年12月31日に終了する6カ月間の経過期間における調整後EPSを1.80ドル〜1.90ドルと予想しています。金利上昇と税負担の増加が、シナジー創出や営業面の改善効果を一部相殺すると見込まれます。
• フリーキャッシュフローは13億ドルとなり、会社側の予想範囲を2億ドル下回りました。経営陣は、主に運転資金の正常化を通じて、今後12カ月間で5億ドル以上のキャッシュを回収することを目指しています。

主要財務データ

事業および営業業績

アムコアのコアポートフォリオは、2026年度第4四半期に約57億ドルの売上高を記録し、出荷量は緩やかなプラス成長に復帰しました。2026年度通期では、コアポートフォリオの売上高は210億ドル、調整後EBITマージンは約12.7%、調整後EBIT成長率は8%となりました。

外食サービス（フードサービス）、ペットケア、プロテイン（肉類等）関連の出荷量は堅調に伸びました。液体およびビューティー＆ウェルネスは横ばいでした。ヘルスケア部門の出荷量は低マージンカテゴリの減速により減少しましたが、高マージンの医薬品関連製品の伸びが利益の拡大を支えたと経営陣は説明しました。

グローバル軟包装ソリューション部門の売上高は、主にベリーの買収および原材料コストの価格転嫁により、為替一定ベースで16%増加しました。既存事業の出荷量は約1%増加し、調整後EBITは20%増の5億3300万ドルとなりました。同セグメントの調整後EBITマージンは15.1%でした。

グローバル硬質包装ソリューション部門の売上高は、為替一定ベースで35%増加しました。既存事業の出荷量は約0.5%増加し、調整後EBITは57%増の3億5200万ドルとなりました。調整後EBITマージンは180ベーシスポイント拡大して12.3%となり、非コア事業を除くと13.3%でした。

経営陣は、出荷量の改善がセグメント、地域、ならびにコア事業および非コア事業の全体に広範にわたるものであると述べました。北米はプラス成長に復帰し、欧州は前四半期比で改善、新興国市場はアジアを筆頭に1桁台前半の成長を維持しました。7月の出荷量は第4四半期の傾向と一致した状態を維持しました。

アムコアは2026年度下半期に5件の事業売却を完了しました。同社は、残る非コア事業の改善を継続しつつ、より高収益かつ高成長のカテゴリにポートフォリオを集中させています。

同社は年換算で約1億4000万ドルの成長シナジー案件を獲得しました。これは当初の3年間の目標である2億8000万ドルの半分に相当します。経営陣は、各案件が収益ベースで完全に寄与する（フルランレートに達する）までには、約12〜15カ月かかると見ています。

経営陣による業績予想（ガイダンス）

2026年12月31日に終了する6カ月間について、経営陣は調整後EPSを1.80ドル〜1.90ドルと予想しています。前年同期の調整後EPSからのブリッジ（変動要因）は以下の通りです：

• 完了した事業売却による1株あたり0.04ドルのマイナス影響（比較ベースは1.79ドルに低減）。
• 金利および税負担の増加による0.10ドル〜0.12ドルのマイナス影響。
• シナジー効果の取り込みおよび営業業績による0.13ドル〜0.21ドルのプラス効果。
• 横ばいからごくわずかなプラスとなる出荷量成長。

経営陣は、9月期および12月期における季節的な利益・キャッシュ創出の低下を反映し、2026年12月31日時点のレバレッジを3.5倍〜3.6倍と見込んでいます。

2027暦年について、経営陣は、自律的（オーガニック）な出荷量の改善とベリーの統合シナジー効果がより具現化することにより、調整後EPSの2桁成長への道筋を見込んでいます。アムコアは、2027年末までに6億5000万ドルのシナジー目標の大半を達成するために必要な取り組みを完了し、レバレッジを約3倍に低減させる見通しです。

また経営陣は、更なるシナジーと緩やかな出荷量成長に支えられ、経過期間から2027年にかけて1桁台半ばのEBITDA成長が見込まれることも示しました。設備投資額（Capital expenditure）は売上高の5%近辺で推移する見込みです。

リスクと注目点

• 中東紛争は、主に在庫や売掛金を通じて累計で約5億ドルの運転資金影響をもたらしました。回収の時期は、供給状況や正常化の動向に一部依存します。
• アムコアは、急激な投入コストのインフレに対して価格転嫁で対応しています。経営陣は価格調整によってインフレを緩和し続けられると想定していますが、樹脂、物流、その他のコストにおける不透明感は残っています。
• 経過期間の調整後EPSは、支払利息の増加、税率の上昇、およびインセンティブ報酬の増額による圧力を受けています。
• 同社は、完了した事業売却により経過期間中に1株あたり0.04ドルの逆風（業績押し下げ要因）を見込んでいます。
• 経営陣の出荷量想定は横ばいからわずかなプラスにとどまるため、需要の動向が、業績がガイダンスの上限または下限のどちらに到達するかを左右する重要な要因となります。

アナリスト質疑応答の要点

運転資金とキャッシュフロー：経営陣は、中東関連による約5億ドルのキャッシュ影響を12カ月間で回収できると見込んでおり、そのうち1億ドル〜3億ドルが6カ月間の経過期間中に回収される可能性があります。取り組みには、在庫回転日数の削減、売掛金の回収、買掛条件の調整などが含まれます。

価格とコスト：アムコアは第4四半期に約2億8000万ドルの価格転嫁を実現し、インフレの大部分を転嫁しました。経営陣は、経過期間中も価格と投入コストが概ね均衡して推移すると見込んでいます。

フリーキャッシュフローとデレバレッジ：経営陣は、今後12カ月間で約25億ドルのフリーキャッシュフローを創出することが、2027暦年末までにレバレッジを約3倍に下げるという道筋と一致していることを認めました。これには通常の事業におけるキャッシュ創出と、運転資金影響額5億ドルの回収が含まれます。

構造改革費用：ベリーの取引に伴う構造改革および統合の現金費用は2026年度に計2億9000万ドルとなり、そのうち統合費用が約1億6000万ドル、取引費用が1億3000万ドルでした。経営陣は、経過期間中の統合関連支出が約5000万ドルに減少すると想定しています。

ヘルスケアの製品ミックス：出荷量の減少は、低マージンの医療用サブカテゴリの構成比低下を反映したものです。経営陣は、点鼻・点眼・吸入デバイスを含む高マージンの医薬品向け用途に加え、GLP-1向け包装、インドでのジェネリック医薬品、アジアでのエアーナイフコーティング技術の成長を指摘しました。

決算説明会（電話会見）文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Thank you for joining us, and welcome to Amcor's Fiscal 2026 Fourth Quarter Earnings Call. [Operator Instructions] I will now hand the conference over to Kate Pearlman, Senior Vice President, Investor Relations and Treasury. Kate, please go ahead.

Kate Pearlman

Thank you for joining Amcor's Fiscal 2026 Fourth Quarter Earnings Call. Here with me today are Peter Konieczny, Chief Executive Officer; and Steve Scherger, Chief Financial Officer. In the Investors section of our website, amcor.com, you'll find today's press release and presentation, which we will discuss on today's call.

Please be aware that we will also discuss certain non-GAAP financial measures, and related reconciliations can be found in the press release and the presentation. Remarks will also include forward-looking statements that are based on management's current views and assumptions. The second slide in today's presentation lists several factors that could cause future results to be different than current estimates. And reference can be made to Amcor's SEC filings, including our statements on Form 10-K and Form 10-Q for further details.

Please note that during the question-and-answer session, we request that you limit yourself to a single question and then rejoin the queue if you have any additional questions or follow-up.

With that, I'll turn the call over to PK.

Peter Konieczny

Thank you, Kate, and thanks to everyone for joining us today. As always, we will start with our industry-leading safety performance on Slide 3, which remains our highest priority. The total recordable incident rate improved this quarter to 0.47, marking the fourth consecutive quarter of improvement as we leverage our world-class safety program across the combined organization. We're encouraged by the early results from our harmonized safety efforts and remain focused on driving continuous improvement.

Before turning to our quarterly results, I want to take a moment to discuss the transition in our Investor Relations team. After more than 15 years leading Amcor's Investor Relations efforts, including through 2 strategic acquisitions, Tracey Whitehead has chosen to remain in Australia and pursue opportunities there. I have valued her steady leadership and the lasting impact she made on the company. Tracey will remain with Amcor in an advisory capacity through December to ensure a smooth transition.

I also want to extend a warm welcome to Kate Pearlman. Kate has developed a strong reputation leading both Investor Relations and treasury teams in consumer-facing industries. We look forward to leveraging her expertise and perspectives.

Turning to Slide 4. We were pleased to deliver strong operating performance in the fourth quarter despite a challenging macroeconomic backdrop. Q4 adjusted EPS of $1.23 per share increased 23% year-over-year, resulting in full year fiscal 2026 adjusted EPS of $4.02 per share, up 13% compared to the prior year.

First, these results reflect the resilience of our business model and the benefits of our diversified global portfolio, strengthened by the transformative acquisition of Berry last year. We were pleased to see an inflection to modestly positive volume growth in the quarter. Sequentially, volume increased approximately 200 basis points with growth across several market categories.

Importantly, we continue to deliver for our customers through a period of unprecedented input cost inflation. Highly coordinated efforts by our teams across the globe enabled us to secure the necessary supply while also executing on productivity initiatives and taking responsible pricing actions to fully mitigate these inflationary pressures.

Second, synergy capture exceeded our expectations during the quarter as we realized $115 million of synergy, bringing total fiscal 2026 synergies to $285 million. This is approximately 10% ahead of our initial year 1 expectations. The successful integration of the legacy businesses, combined with our proven track record of execution, continues to create meaningful value. We have built a strong pipeline of opportunities across procurement, SG&A, operations and commercial growth and remain confident in achieving the $650 million 3-year synergy target.

Third, we continue to make progress on optimizing our portfolio with a total of 5 divestitures closed in the second half of fiscal 2026. By sharpening our focus on higher return, higher growth opportunities across our core business, we expect to drive more sustainable growth in attractive categories and markets. At the same time, our noncore businesses delivered improved year-over-year performance, driven by strong execution against broad-based operational initiatives.

And finally, turning to our outlook. As part of our previously announced fiscal year-end transition, we are providing expectations for the 6 months ending December 31, 2026. We expect adjusted EPS to be in the range of $1.80 to $1.90 per share, which reflects continued improvement in our operating performance, partially offset by higher interest and tax expense. Later in the call, Steve will walk through the building blocks for our EPS outlook.

Turning now to Slide 5. We also wanted to provide investors with a view of where we see the business heading in 2027 as the benefits of our transformation become more fully realized. We expect that our portfolio actions will drive increased penetration in our higher growth, higher-margin focus categories. By year-end 2027, we expect to complete the actions required to deliver the synergies and to achieve the majority of the $650 million target.

We also anticipate organic volume growth as we leverage the Berry acquisition, which created a stronger, more diversified portfolio with expanded product offerings, broader geographic reach and enhanced capabilities in innovation and sustainability. Against this backdrop, we have line of sight to delivering double-digit adjusted EPS growth in calendar year 2027. We're expecting leverage to be approximately 3x by year-end while modestly growing the dividend. We're entering this next chapter from a position of strength. The underlying business is performing well. Integration is on track, and we see a compelling path to accelerating earnings growth and cash flow generation over the next several years.

Moving to Slide 6 and our financial performance for the fourth quarter and full year. The business generated quarterly revenue of $6.4 billion, adjusted EBITDA of $1.045 billion and adjusted EBIT of $836 million. Each of these metrics increased versus the prior year period, driven by synergy realization, disciplined cost management and 1 additional month of acquired Berry earnings, which supported further margin expansion during the quarter.

Adjusted EPS increased 23% to $1.23 per share for the quarter at the high end of our outlook range. This includes benefits from organic volume growth, strong synergy capture and responsible price and cost management during a period of rapid inflation. For the fiscal year, free cash flow was $1.3 billion, which was impacted by the Middle East conflict.

Steve will discuss these dynamics in further detail later on the call. Today, the Board also declared a quarterly dividend of $0.65 per share, which represents a modest increase over the prior year and reflects our long-standing commitment to annual dividend growth.

Turning to Slide 7. As I mentioned earlier, synergies are tracking ahead of expectations, primarily driven by accelerated execution of our G&A and procurement initiatives. We have also made progress on operational and network synergies, which we expect to benefit earnings growth and productivity over the next 2 years.

Finally, we achieved half of our 3-year growth synergy target this year with new business awards representing nearly $140 million compared to our initial $280 million 3-year goal. As we expected, we're winning new business by bringing together highly complementary product portfolios with participation in attractive categories. This allows us to unlock new opportunities that neither legacy company could have accessed on its own.

Let me give you just one example. In Mexico, we recently extended our relationship with a legacy Amcor customer that specializes in beauty and wellness, so that we are now leveraging expertise in closures from the legacy Berry team to produce caps for their products as well. In fact, just 1 year into the integration, our pipeline of growth synergies continues to build, which reinforces our long-term expectation that there is greater potential for revenue synergies beyond the initial $280 million 3-year target.

Keep in mind that fiscal year earnings benefited by a few million dollars as a result of these wins, which are expected to ramp up further in the coming months. Taking all these synergies together, we achieved $115 million in the fourth quarter, resulting in full year synergies of $285 million, which were 10% ahead of our initial target. Looking ahead, the organization remains focused on driving out the cost synergies while taking advantage of our enhanced capabilities to deliver growth with our commitment to deliver the total target of $650 million over 3 years intact.

With that, I'll turn the call over to Steve.

Stephen Scherger

Thank you, PK. Moving to Slide 8 and beginning with our core portfolio. Net sales of approximately $5.7 billion in the quarter inflected to modestly positive volume growth and was in line with the overall company. For the full year, the core portfolio generated $21 billion in sales with EBIT margins of approximately 12.7% and EBIT dollar growth of 8%, ahead of the total company.

As we've discussed previously, the core portfolio includes 6 strategic focus categories. Within Nutrition, we have proteins, liquids, foodservice and pet care as well as health care and beauty and wellness, which represent more than 50% of core portfolio sales. These are attractive end markets where we expect that our innovation, customer partnerships and differentiated capabilities will drive sustainable growth and support greater resilience across economic cycles.

During the quarter, we saw strong volume growth in the foodservice, pet care and protein categories, while liquids and beauty and wellness volumes were flat. In health care, while overall volumes were down due to softness in lower-margin health care categories, underlying growth trends across our health care platform remain encouraging and reinforce our confidence in the long-term opportunity in this focus category.

In aggregate, volume performance across the focus categories was in line with the core portfolio, with trends improving as the year progressed. As PK mentioned earlier, we are pleased with the improved performance of our noncore businesses with performance up significantly in the fourth quarter.

Turning to Slide 9 and the Global Flexible Packaging Solutions segment, where sales increased 16% on a constant currency basis, driven primarily by the Berry acquisition, along with the pass-through of higher raw material costs. On a comparable basis, volumes were up approximately 1% year-over-year. Notably, this represents a sequential improvement of nearly 200 basis points compared with Q3.

Across North America and Europe, volumes were up modestly compared with the prior year. Volumes across emerging markets were up low single digits, mainly driven by continued growth in Asia. Adjusted EBIT was up 20% on a constant currency basis to $533 million, primarily driven by acquired earnings, net of divestitures and synergy benefits. On a comparable basis, adjusted EBIT was up approximately 18% and adjusted EBIT margin of 15.1% reflects synergy benefits in line with our expectations. Excluding synergies, comparable earnings were up mid-single digits compared to the prior year.

Turning to Slide 10 and the Global Rigid Packaging Solutions segment, where sales increased 35% on a constant currency basis, primarily due to the Berry acquisition, along with the pass-through of higher raw material costs. On a comparable basis, volumes were up approximately 0.5% in both the core and noncore businesses. This was sequentially stronger by approximately 200 basis points, driven in part by improvement in both consumer demand and stronger performance in our noncore businesses.

By region, volume growth was driven by developed markets with sequential improvement in both Europe and North America. Adjusted EBIT was $352 million, up 57% over last year on a constant currency basis, primarily driven by acquired earnings, net of divestitures and synergy benefits.

On a comparable basis and excluding noncore businesses, adjusted EBIT was up approximately 24% compared to the prior year, primarily due to synergy benefits as well as volume improvement. Adjusted EBIT margin was 12.3%, 180 basis points higher than the prior year. Excluding the noncore businesses, adjusted EBIT margin was 13.3%.

Moving to free cash flow and the balance sheet on Slide 11. After funding $290 million of Berry transaction restructuring and integration-related cash costs, free cash flow for the year was $1.3 billion, which was $200 million below our outlook range. This was primarily driven by working capital impacts across inventories and receivables due to the Middle East conflict that were higher than expected as well as accelerated integration spending to expedite synergy capture.

Importantly, we target recovering more than $500 million in cash over the next 12 months, primarily driven by the reversal of working capital impacts related to the Middle East conflict and other initiatives to structurally improve working capital.

Despite lower-than-expected cash generation, leverage at quarter end was 3.5x, in line with our expectations, driven partly by proceeds from divestitures. As PK mentioned, we are expecting leverage to be approximately 3x by the end of calendar year 2027, driven by robust free cash flow generation, which underscores our commitment to an investment-grade credit rating.

Moving to our transition period outlook on Slide 12. We expect to deliver adjusted EPS in the range of $1.80 to $1.90 per share during the transition period. Walking through the building blocks from the $1.83 adjusted EPS we reported in the prior year period, we expect a $0.04 per share unfavorable impact from the divestitures that we have completed to date, which results in baseline prior year adjusted EPS of $1.79. From there, we expect a $0.10 to $0.12 unfavorable impact from higher interest and taxes and a $0.13 to $0.21 positive impact to adjusted EPS from synergy capture and net operating performance, which represents roughly double-digit growth at the midpoint.

We expect leverage to be in the range of 3.5 to 3.6x on December 31, 2026, in line with seasonally lower earnings and cash flow generation in the September and December quarters. As we reflect on the fourth quarter results, we are pleased with our improved operating performance, which demonstrates the strength of the combined organization as a leading global consumer packaging company. As we move into the transition period and look ahead to calendar year 2027, we are looking forward to consistently delivering for our customers, our employees and our shareholders.

Thank you for your time today. Let me turn the call back over to PK.

Peter Konieczny

When we outlined our expectations for fiscal 2026 more than a year ago, we targeted double-digit adjusted EPS growth, and we delivered on that commitment. We finished the year strong despite a demanding operating environment, driven by disciplined execution across the business. I'd like to thank our global team for their hard work, dedication and commitment to serving our customers.

As we move into the transition period, our confidence in our momentum continues to build. With our integration efforts largely behind us, we're now seeing the benefits of this global Consumer Packaging combination translating into stronger performance. While we have accomplished a great deal over the past year, I believe we are still in the early stages of unlocking the full potential of Amcor.

That concludes our prepared remarks. Operator, please open the line for questions.

Operator

[Operator Instructions] Your first question comes from the line of John Purtell with Macquarie.

質疑応答

John Purtell

Look, just a question on working capital there, Steve. Thanks for the color. Just the $500 million of Middle East sort of working capital impacts, you expect to get that back, obviously, over the next 12 months, I think, is what you said. How much of that do you expect to get back in the next 6 months as distinct from 12? And just you mentioned structurally improving working capital collection. Any color there?

Stephen Scherger

Yes, John, it's Steve, and thanks for joining us this evening as well for the call. You described it well. We cumulatively have about a $500 million impact from the Middle East conflict. The original estimate was around $300 million, moved to $500 million. By the way, that $200 million increase that we described is primarily accounts receivable driven. And so our customers, as they were taking on the incremental pricing associated with our products, they're paying on terms, but they were, in many ways, managing their own balance sheets, and we saw a little bit of an increase in our days sales, larger -- slightly larger than expected.

As we mentioned, we expect to get the $500 million back over the next 12 months. The exact timing over the next 6 months, we certainly expect to make progress. So if you put that into the $100 million, $200 million, $300 million range, I think that's a fair assumption for this first 6 months, if you will. Some of that will, of course, depend upon how are the structural realities of continued supply availability and the like, which right now is in a very good place. And so we do expect to methodically get that $500 million back over the next 12 months and would get a portion of it back here during this transition period.

And by the way -- sorry, John, I apologize to you, just so I hit your answer. Structurally, it's the kind of things you would expect from us. We've got very specific goals for days of inventory that we're carrying, for example, both at the raw material level and the finished goods level, specific targets for our days sales outstanding and then a continued positive march on increases in days payables. It will be across all 3 major components of our working capital.

Operator

Your next question comes from the line of Ghansham Panjabi with Baird.

Ghansham Panjabi

PK and Steve, just curious as to the price cost dynamic during the second quarter. Was there any benefit? I mean, obviously, it was a chaotic backdrop with raw materials and then your own pricing initiatives. So I'm just curious as to how that should cut specific to 2Q. And then if there was any benefit or negative, I guess, how should we think about price/cost evolving into the back half of the year? What do you have embedded in guidance?

Stephen Scherger

Ghansham, it's Steve. I'll take that on. In our fourth quarter, the quarter that we just completed here with our fiscal year, we had about $280 million of price realization, which was the pass-through of the vast majority of our inflation. So as we anticipated, the price pass-through was in line with the overall inflation that we experienced, and we would expect that to continue to be the case as we manage through the transition period.

And so overall, the stability of that price/cost relationship was very good in our fourth quarter, and we would expect to maintain that relative relationship here over the coming quarters through the transition period.

Peter Konieczny

Yes, I may want to make an additional comment here, which is not so much a modeling question, but just taking a step back. We've been very pleased with the way how the organization has sailed through, particularly the fourth quarter in light of the inflation that came at us very quickly, obviously, on the back of the Middle East conflict.

Think about it this way. I mean, we were still handling the integration. Most of that now is behind us, but halfway through fiscal '26, we were still in the middle of it, and the organization and the team were tested, and they performed excellently against that. And I've been very pleased with the performance of the organization to essentially recover what we were seeing on the input side.

Operator

Your next question comes from the line of Nathan Reilly with UBS.

Nathan Reilly

The question is just in relation to the, I guess, the comment that you provided there in terms of the CY '27 double-digit EPS growth outlook. You've highlighted you're expecting a return to organic growth. Just kind of keen to get a bit of an understanding in terms of what you're assuming there in terms of broader market volume-led growth? And also just in the context of, I guess, the outcome of bringing the businesses together, I think at the time, you highlighted that the combination should be able to deliver kind of growth about 1% or so above market. So just trying to get an understanding of how those 2 points are playing into that view around your organic growth outlook returning in '27.

Peter Konieczny

Nathan, it's a great question. Thank you. I'll take that. This is PK. Let me take a step back here. It may feel like a lengthy answer, but I won't forget the questions that you've actually asked. Let me tell you first, we're pretty excited about calendar '27. And the excitement comes from the fact that you got to look at this as this being the first pretty much "clean year" after the combination of Amcor and Berry.

In fiscal '26, we had essentially 2 targets. It was integration and enabling growth. And we were very busy with the integration. I just made a comment, and I think we are in a good spot now that we exit fiscal '26. And you'll have that team in the organization that actually performed really well through the challenging operating environment. You have that same team sort of enter into calendar year '27.

And in terms of the growth side, there were a number of things that we have done. And I want to remind everybody, we're very clear in terms of our portfolio and where we want to play. Think about the whole conversation around the core versus noncore. We'll expect to make more progress on the noncore side of the business.

But then when you look at the core, we're also very clear in terms of how this company is positioned. We're playing in nutrition, we're playing in health, beauty and wellness, and we're playing in specialties. And when you double-click on that, you find 6 focus categories. Steve has just laid them out in our prepared comments. And they already make up more than 50% of the top line of the company. And as they will grow, obviously, that will further increase. So very clear on where we want to play, and that focus will yield success.

The other thing is, and this maybe comes back a little more to your question, is how do we win in those categories. And on that end, there's 2 things. We have the combination of the 2 companies, Amcor and Berry, which will translate more into performance going forward. And you've heard us talk about a more global or broader -- first of all, broader product range. The companies are together more global than they were before each on their own.

And we talked about capabilities like an innovation and sustainability that we can bring to the market. And those things are really driving the growth synergies where we are making really good progress. And I expect that really just to be the beginning. I think we're scratching the surface here. There's going to be a lot more opportunity. So we'll translate that.

And then the other piece that gives us confidence for growth in calendar '27 is the fact that we have, as I said before, enabled growth between the 2 companies. So it would have been easy for us just really to focus on taking cost out in the combination and the integration. But we did something else. We focused the companies more on service, on quality, on customer delight. And we're bringing more tools to our frontline teams in order to drive better growth.

And that combination, leveraging the benefits of Amcor and Berry combined, plus the growth enablers that I just spoke to, they give us good reason to believe that we will see outperformance versus market. I think at this point in time, you'll probably see us more move with the market and the market is more positive than what we've seen in the last couple of quarters. We're taking advantage of that. We're seeing green shoots. There's no question. When I just think about protein and pet care, we're doing really well. That's collectively somewhere between 15% and 20% of the company. But going forward, we'll see more outperformance. I hope that answers the questions.

Operator

Your next question comes from the line of Ramoun Lazar with Jefferies.

Ramoun Lazar

Maybe if I could just follow up on that volume -- on those volume comments. Just anything in that quarter that stood out in terms of potentially one-off benefits to your business or whether the volume performance was a more broad-based improvement over the quarter? And I guess just focusing a bit further on some of the end markets, what are you seeing? You mentioned green shoots. I guess if you could just elaborate a bit more on what you're seeing on the volume side, that would be great.

Peter Konieczny

Sure, Ramoun. Happy to do that. Look, you started off the question with Q4, are there any one-offs or developments of one-off character driving the volume performance? It's a fair question. We actually spent some time on trying to figure out if that's the case. We believe that there would have potentially been 2 factors that could be a bit more of a one-off character. One is just simply in an accelerating inflationary environment, the request of our customers to buy ahead, that could have been one. And the other one could have been pretty much around the World Cup. Those were the 2 things that I would carve out that could have some one-off character.

So we did some digging around that. And I can tell you that we wouldn't have had like a couple of customers that did buy ahead or in terms of the World Cup, we did see some strengthening of our beverage business also in the foodservice category. But when we add it all up, we don't think that this adds up to anything that would be material to the volume performance in the fourth quarter. So that's your first question.

In fact, when I talk to the volume performance, it's been pretty broad, and across the business, broad across core versus noncore. It's been broad between the 2 segments. It's also been broad when you look at the focus categories or also the regional performance, actually. So it's been a pretty strong broad-based volume performance in the quarter, which we like.

In terms of some highlights, I don't want to make this too long-winded here, but emerging markets, we've seen really good growth throughout the whole year continuing into the fourth quarter. Developed markets improved sequentially. We're talking about North America, which is back to growth. Remember, in the third quarter, we had the winter storms. Europe improved sequentially. And focus categories, as I said before, were pretty much in line with the overall business.

And then we -- I talked about some green shoots. Foodservice, very strong performance. Pet care continues to perform really well on the back of our material science and the solutions that we can bring to market. Protein continues to excel. Remember, on the back of the Moda acquisition, we got ourselves into the equipment business. We're now having a significant share of new equipment installations in the market, which will -- going forward and which are starting to pull consumables. So those are the type of green shoots that we're seeing.

Stephen Scherger

Ramoun, it's Steve. Just to add to PK's comments, one of the -- we do have, of course, a view into July. And on a positive front, July continued consistent with Q4. And so in terms of kind of net pull forward and the like, we just didn't observe anything and July is a good indicator that some of the positive momentum that we've seen from a volume perspective has continued here into the first quarter with our July results now in hand.

Operator

Your next question comes from the line of George Staphos with Bank of America Securities.

George Staphos

My question is going to be around some margin factors relatedly. So in reading the press release and reading the material guys, price/mix was related as negative, even though you're obviously passing through inflation. And I was wondering what was driving that price/mix negative, if I read it correctly, in the quarter? And what are the implications into the transition period? And kind of a related bonus piece, I think you gave us the EBIT performance in Flexibles ex synergy. Did you give us that for rigid? And if not, could you provide that?

Stephen Scherger

Yes. Thanks, George. Let me touch on those. I think in terms of looking at the top line, you touched on it. What we've seen on price/mix, which excludes all of the raw material pass-through, that minus 1% has kind of been consistent with what we've observed over the last year. There's always bits of movement kind of in the competitive dynamic, the reearning of business, et cetera. So that minus 1% is very consistent, and doesn't really have that negative impact on our economics.

Repeating what I mentioned earlier, $280 million of top line was pass-through consistent with our inflation, no impact on our economics in total. It does, to your point, at $280 million in the quarter, that's roughly 4%, 5% top line growth. It has some minor implications on margins, but overall margin performance was quite good.

And I think in terms of your EBIT question, we really -- if you look at on a -- I think the key thing, George, on a comparable basis, when you -- which is the lower left portion of our segment slides, that's really where you can see that we earned on the improvements sequentially on the volume growth, that 200 basis points of volume improvement quarter-to-quarter was successfully earned on, and you can see that in the margin growth. And so I think as you're looking at the segment reporting, that lower left corner is kind of the best place to focus because it's comparable on a like-for-like basis and gives you a sense for the margins.

Operator

Your next question comes from the line of Mark Wilson with RBC.

Mark Wilson

Steve, it's probably a question for you just in relation to the asset sales, and thanks for outlining the impact going forward. Just wondering if there was a gain on the sale of the assets in the period? And if so, where was that booked?

Stephen Scherger

There was a modest gain on one of the sales of the assets. It is not included in our adjusted EPS figures. So it's below the line. It's down in our -- the figures that we have for the adjustments around transaction-related costs, et cetera. So it's not -- there are no gains or losses inside of the $4.02 EPS that we shared with you, if that's the question, just to make sure I'm answering it for you.

Operator

Your next question comes from the line of Gabe Hajde with Wells Fargo.

Gabe Hajde

I want to ask 2 quick ones. If we're doing our math correct, in the first half, implied EBITDA is somewhere around $1.8 billion. And I appreciate that you're not giving us kind of calendar '27 guide other than talking about it, I guess, on track with double-digit EPS growth and synergy realization. But if I tack on the remaining kind of synergies and then make our own assumptions about growth, it's something in that $3.8 billion to $4 billion range. Anything in that -- those bridge items that you would kind of steer me towards?

And then the second one, it looks like CapEx is starting to accelerate here in the first half. I don't know if that's -- I shouldn't say first half, but sorry, transition period. I don't know if that's timing related or if we should read anything into that?

Stephen Scherger

No. Thanks, Gabe. I'll start and PK can add any color relative to the strategic implications. But fundamentally, you're correct in how you're observing what is implied both in terms of the transition period and into 2027, which is fundamentally mid-single-digit EBITDA growth. That's really kind of at the core of the assumptions that we will continue to have our synergy benefits as well as some modest volume growth. And there's always moving parts, by the way, of other things that are moving in and out.

But from an EBITDA perspective, 6 months, next 12 months, so over the 18, kind of that mid-single-digit EBITDA growth is implied, and it is then inside of the range that you just provided. And so I think you're overall in line there.

What you've seen on CapEx is roughly 5% of sales. We've used that quite a bit to talk about what we think is steady and consistent CapEx to support our growth initiatives. And so you're seeing us invest at that level, not materially above historic levels, but we believe that, that 5% is a good harbinger for our ability to grow organically and invest back in the business.

Operator

Your next question comes from the line of Keith Chau with MST Marquee.

Keith Chau

Steve, I just want to ask you a question on free cash flow for the next 12 months. I mean, I appreciate the comments you made there about getting the $500 million of working capital impulse back. But I just want to confirm something with you. So last year, I think free cash flow started -- or the target started at $1.8 billion to $1.9 billion. On top of that, this -- for the next 12 months, you should be getting the $500 million back in that working capital impulse from the Middle East conflict.

Hopefully, everything kind of settles from that. And then plus you get incremental synergies as well. So we should be staring down the barrel of $2.5 billion or so of free cash flow for the next 12 months of the stub period plus the first half of your next calendar year or new fiscal year. Would you agree that $2.5 billion is a reasonable number to target for the next 12 months?

Stephen Scherger

Yes. Thanks for that, Keith. I think maybe playing that back to you in similar words. If you look at kind of the next 12 to 18 months, which is the pathway to 3x levered, it's really 3 things, and you had them embedded in your question. One is, to Gabe's question, continuation of mid-single-digit EBITDA growth. So the EBITDA continuing to grow. That's part of the pathway.

And then as you just said, roughly $2.5 billion of free cash flow would be a combination of the natural cash flow capabilities of the business, EBITDA minus CapEx, minus the interest and taxes, plus the $500 million of return from the Middle East. And so you're in line with the kind of assumptions or the pathway, if you will, towards the end of 2027, 3x levered because all of that kind of correlates together, I think, if that's inherent in your question.

Operator

Your next question comes from the line of Matt Roberts with Raymond James.

Matthew Roberts

4Q's EPS was up 23%. I think you had Berry 2 months of that in the prior year. So now that Berry is fully in, the September quarter is still down at the midpoint. Steve, you [Technical Difficulty] I believe, drags from interest and taxes. But should EBIT be up they're hitting earlier and July volumes appear to be similar and then slightly up to June Q? Or any other puts and takes there on the EBIT line looking at the September quarter and second half?

Stephen Scherger

Yes, Matt, let me touch on that. You're really referencing Page 12 on the outlook, and you summarized it well. That $0.13 to $0.21 bridge there that you see, think of that at the midpoint, there's roughly $80 million of after-tax earnings or roughly $100 million of EBIT. And so we do expect to see some EBIT improvement year-over-year. As I mentioned earlier, a lot of that is, of course, the capture of the $110 million of EBIT synergies that's implied in our outlook. We'll get a little bit of favorability year-over-year, some reduced depreciation that impacts EBIT. That's as we've dialed in the depreciation for the Berry assets that we've acquired. And there's always, of course, some other puts and takes.

But EBIT and EBITDA improvement is, of course, critical as we continue to drive the business forward. It's offset, as you referenced by some of the increased tax an assumption of 16% in the first half, returning towards a more normalized but low 19% and then the realities of some of the refinancings that were completed in the prior year, which is a modest increase in our interest expense. But that bridging on EBIT is kind of, I think, critical to your question.

Operator

Your next question comes from the line of Brook Campbell-Crawford with Barrenjoey.

Brook Campbell-Crawford

Just one on incentive compensation. I think there might have been some sort of benefit in the June quarter, perhaps given sort of accruals and things for incentive comp and perhaps that might unwind in the first half. Do you mind maybe just stepping through that dynamic in case that is something we need to be across this?

Stephen Scherger

Yes. Thanks, Brook Campbell. It's Steve again. As we mentioned in the footnote, we have some modest year-over-year increases in incentive compensation. That is kind of a traditional pathway of an assumption that we'll be accruing at target compensation. Last year, we were accruing at modestly below target compensation at roughly 50%, primarily driven by the compensation that we have that's associated with our growth and cash flow expectations, which, as you're aware, in the prior year, we were not at the levels that we had originally anticipated. So that's a little bit of the waterfall bridge, if you will, as to the compensation component during this transition period.

Operator

Your next question comes from the line of Jakob Cakarnis with Jarden Australia.

Jakob Cakarnis

I just wanted to go back to Slide 19, if I could, please, PK. It sounds like calendar '27 is shaping up where things could start to look a lot better. I'm just wondering how far of a management team you think you are from the current model that you displayed there where you've got $3 billion of annual cash flow, that reinvestment target back in the business of $1 billion plus and the balance sheet utilization of $1 billion plus, please?

Peter Konieczny

Jakob, you weren't really coming through that clearly here. Let me just check in with the team if they understood what the question was.

Stephen Scherger

So Jakob, I think you're asking about the kind of the value creation model that was a part of the original that was developed with the acquisition. I think are you asking, is it still in line with those expectations? Was that the nature of the question?

Jakob Cakarnis

That's right, please, Steve. Yes, just to pitch it again. Hopefully, it's clearer. In that value creation model, you're talking about annual cash flow of over $3 billion, reinvestment back into the business of over $1 billion and then also the balance sheet utilization of over $1 billion. The question was pitched at PK. Just with calendar '27 shaping up as a better, stronger year for the business, more representative of the go forward, how far do you think we are away from that value proposition model, please?

Peter Konieczny

Yes. Look, I think we're in a -- so much better now in terms of the line, Jakob. Thank you. I think we're well on our way to getting there. What we're seeing here on Slide 19, broken out to the right, is sort of the swung-in model after we have taken advantage of all the opportunities and the potential from the combination of the 2 companies. I think it still holds. And I think we're making good headways. Let's not forget that '27 is going to be the year, for example, on synergies where we are going to pretty much see the bulk of it.

And in terms of our activities that we will implement, we will pretty much be done by the end of '27. So that will impact our earnings capacity and also the cash flow generation. But generally speaking, we are well on the way. And in terms of the capital allocation model, we will support the business, and this is the way how we think about it. We are committed to the dividend. And of course, this will all go along with a commitment to investment-grade balance sheet, which is all in line with what Steve has laid out here in terms of the use of cash in order to reduce our leverage.

Operator

Your next question comes from the line of Mike Roxland with Truist Securities.

Michael Roxland

Steve, I just wanted to follow up quickly with you. You mentioned that in terms of the 1H or the transition period outlook, some modest volume growth. Any way to quantify that? 25 bps, 50 bps? What type of volume growth are you embedding within that -- the transition period outlook? And then secondly, PK, you mentioned softness in health care. It seems like every quarter, there seems to be some issues around health care and volume growth accelerating in that key category for you. So what's driving the continued softness in health care? And what gives you confidence that volumes will ultimately inflect?

Stephen Scherger

Mike, it's Steve. I'll attack the first and PK, the second part of your question. The assumption embedded in the $1.80 to $1.90 for the first -- for the transition period, volume assumption is flat to very modestly up. So think about that. It's a pretty narrow range, as you can appreciate.

Peter Konieczny

And then on health care, Mike, thanks for the question because it's a bit of an obvious one when you listen to our commentary. We're laser-focused on volumes and driving volumes forward because we believe that is the ultimate metric to follow when you want to decide if you're successfully competing in the marketplace. But volumes is not always the best metric to decide on the progress that we're making in our focus categories. And in health care, that would be an example.

So I would start my reflection here by saying don't read too much into the volume performance on the health care side. What we're really seeing is a mix shift, and we're not unhappy with the mix shift. We have seen some volumes reducing in a lower-margin subcategory in medical, and that is offset by really good progress on the pharma side, where we have higher-margin products, think about nasal, ophthalmic or inhalation devices that we bring to market.

And the combination of the 2 actually leads to a profit expansion in the health care business. So we're happy with the overall performance. But as we are very focused on volumes, we break out the volume performance of health care and that mix shift is driving the volumes down right now.

Now we will -- as I reflect on my answer here, we're excited about the business and also the outlook, and you talked a little bit about that or you were inquiring around that. A couple of things just to remind you of here. We talked about our participation in GLP-1 with the win. It actually was a synergy win for a customer bringing oral solid dose to the market, multiple regions, multiple format win, and we're up and producing. We've made some really good progress with generics in the fourth quarter also in India. And we've also talked about the ramp-up of our air knife coating technology in Asia, which is the first of its kind, which will also support the medical business in good margin categories.

Operator

Your next question comes from the line of Anthony Pettinari with Citi.

Anthony Pettinari

PK, Steve, on the second half outlook for the stub period, could you talk about your assumptions around cost and just trajectory of resin, fuel, freight, any cost items that you'd call out? And then can you just talk generally about the level of conservatism in the second half guide and what could get you to sort of the higher or lower end given you've had a lot of success with these synergies?

Stephen Scherger

Anthony, it's Steve. In terms of our kind of guiding principles here, we obviously don't outlook specifically resin, logistics, et cetera. But our assumption remains that our pricing will offset that inflation. So that relationship of our pricing offsetting that kind of is the fundamental assumption. I think the banding on our transition period outcome, as PK just mentioned, is probably just bands around volume. Are we flat? Are we modestly up? Because what we are showing is good earning power on modest movements in volume. And I think that will be the primary movement, which is a pretty tight band around our EPS guide for the 6-month transition period.

Peter Konieczny

And then, just -- Steve and I were looking at each other and wondering who should answer the question. I really don't have much to add to what Steve said. We can complete each other's sentences. But I think what's important to understand in this context here is we don't really know how the Middle East conflict plays out. What's more important for us is really how the supply chains normalize. That will have an impact on resin costing for us as an input.

And what Steve said is 100% correct. We feel like we can do the right thing here for the business and for our customers, which means should the inflation go up or go even further up or go up again, we have an opportunity to deal with that. If it comes down, we'll do the right thing for our customers, and we'll adjust our pricing. So that is sort of the base assumption as we look forward.

Operator

Your next question comes from the line of Ketan Mamtora with BMO Capital Markets.

Ketan Mamtora

Maybe just one more on the 6-month transition EPS bridge. The $100 million EBIT that you talked about, Steve, any way to sort of just understand the puts and takes there? Because I would imagine the synergies alone would get you above that level. What are the other factors that we should keep in mind as we think about just that component of the bridge?

Stephen Scherger

Ketan, it's Steve. Yes, you touched on it well. The primary positive there is net synergies. And as we mentioned, we've got a couple of moving parts. There'll be some modest decrease in our depreciation expense and then a modest increase on the incentive compensation expense that we just chatted about in the earlier question. Those are the 2 kind of moving parts, if you will, that has some impact on the EBITDA, just given that the depreciation is down, I think a bit -- and you'll see it in the guide, you can kind of get to a $30 million reduction in depreciation expense during the 6-month period, if you kind of look at actuals versus the guide that's in the supplemental section of the materials. Those are 2 moving parts beyond the synergies.

Operator

Your next question comes from the line of Hillary Cacanando with Deutsche Bank.

Hillary Cacanando

So you've now secured about $140 million of annualized revenue wins or roughly half of your 3-year growth synergy target. Can you provide a little more detail on where those wins are coming from, whether they are primarily cross-selling with an existing customer or new customer wins? And how should we think about the timing of those awards converting into revenue and earnings over the next 12 to 24 months?

Peter Konieczny

Yes. Thanks, Hillary. This is PK. It's pretty much all of the above that you mentioned. We talked about the synergy wins before, and they go back to the potential really that the combination has brought along. So think about it this way. One lever is a combination of products between Amcor and Berry that creates an additional value opportunity for our customers. One of the things that we've said, one of the 2 companies makes the bottle, the other one makes the closure or the pump that goes on top of it, and that creates a solution. That's one opportunity.

Second one is you leverage the more global reach of Amcor for the Berry products. These things are happening. The third one is, and this was one of the examples I spoke to, cross-referencing of customers from one side to the other. These are the type of things that create the synergies, and there is lots of opportunities there. I think we're really just scratching the surface. And we have trouble to really estimate that. And against our estimates, we're making really good progress.

Now the second part of your question was how quickly does that translate? At this point, we would earmark about $140 million of annualized wins. They will play out, obviously, over a period of sort of 12 months once you get them, right? You need to ramp up first, say, it takes you about 12 to 15 months to see a full cycle of full revenues, and that will then translate to the bottom line. So that's why we're saying at this point in time, we've really just had the smaller part of contribution falling to the bottom line from those wins. But as we move forward through the transition period and into calendar '27, that will become a lot more.

Operator

Your last question comes from the line of Jeff Zekauskas with JPMorgan.

Jeffrey Zekauskas

And restructuring costs were $290 million this year. I expect that they would go down next year. How much would they go down? And is that benefit included in your $500 million working capital benefit? And does that $500 million working capital benefit assume flat raw material costs? And is your challenge in the coming quarter, how you modulate your declining raw material costs because polyethylene came down $0.15 a pound in June and propylene came down, and you did a great job during this period of inflation, might you be able to hold on to some of the raw material benefit? Or does it go back perfectly?

Stephen Scherger

Yes. Thanks for that, Jeff. It's Steve. Just very briefly, you touched on it well. $290 million of total Berry transaction restructuring costs, $160 million of that was more integration-oriented, $130 million was transaction-oriented. You're correct that during the transition period, that number will come down quite materially. The transaction is behind us. We would expect more in the $50 million range for the integration-related costs. So it's a good tailwind.

It is not in the working capital improvement assumption. It is more in the cash flow assumption relative to the 3.5x to 3.6x leverage targeted for end of December '26. And you're into the good complexities of the business, PP, PE movements up and down. Overall, our assumptions have reasonable stability in those cost assumptions in terms of the ability to get the $500 million back. In other words, not major movements up or down, which could have some implications, obviously, on timing. It's a good, thoughtful question. And you're right, there could be some implications. Overall, our confidence in the recovery of the Middle East conflict cash flow is high, as you've heard us articulate. So thank you.

Operator

We have reached the end of the time we have for the Q&A session. I will now turn the call back to PK for closing remarks.

Peter Konieczny

Yes. Thank you, operator, and thank you, everybody, again, for joining us. We certainly look forward to the opportunity to sit down with many of you over the course of the quarter and clarify further our expectations and the quality of the business. Thank you.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.