アムコア (AMCR) 2027年第1四半期決算説明会：コストインフレを受けEPS見通し引き下げ

Amcor（NYSE: AMCR）の2027年度第1四半期決算は、販売数量のモメンタム改善と継続的なシナジー創出を示したものの、エネルギーおよび物流コストの上昇を受け、経営陣は移行期間の調整後EPS見通しを引き下げた。

主要なポイント

• 四半期売上高は前年同期比7%増の61億ドルとなった。1%のオーガニックな販売数量増と原材料コスト上昇分の価格転嫁が寄与した。
• 調整後EPSは0.95ドルとなり、事業売却の影響を調整した為替変動の影響を除いたベースで前年同期比横ばいだった。調整後EBITDAは8億8300万ドルで、事業売却および為替変動の影響を除き横ばいとなった。
• Amcorは、エネルギーおよび物流コスト上昇の回収時期を理由に、移行期間の調整後EPS見通しを従来の1.80〜1.90ドルから1.70〜1.80ドルへ引き下げた。
• 同社は当四半期中に6000万ドルのシナジーを創出した。経営陣は移行期間で1億3000万ドル、3年間で6億5000万ドルとする目標を据え置いた。
• フリーキャッシュフローは、取引・事業再編・統合関連コスト3100万ドルを差し引いた後で8億2000万ドルの流出となった。レバレッジ比率は季節的要因により3.76倍へ上昇した。
• 経営陣は2027年（暦年）に2桁の調整後EPS成長を見込んでおり、2027年末までにレバレッジ比率を約3倍とする目標を維持している。

主要財務データ

事業および営業実績

Amcorは当四半期中に樹脂コスト上昇分4億3500万ドルを価格転嫁した。実質的な収益性は比較的安定していたものの、報告売上高の増加により利益率は計算上希薄化することとなった。

中核ポートフォリオの売上高は56億ドル、販売数量は約1.5%増加した。事業売却の影響を除いた為替変動の影響を除いたベースで、中核事業のEBITは3%増加した。報告ベースのEBIT利益率は11.9%だったが、原材料コストの価格転嫁による90ベーシスポイントの希薄化要因を除くと12.8%となった。

グローバル・フレキシブル・パッケージング・ソリューションズ

原材料コスト転嫁額3億1600万ドルが牽引し、売上高は為替変動の影響を除いたベースで10%増加した。報告ベースの販売数量は横ばいだったが、北米における未加工フィルムの売上を除くと約1%の増加となった。

調整後EBITは為替変動の影響を除いたベースで1%増の4億1400万ドルとなった。調整後EBIT利益率は12.3%で、価格転嫁に伴う希薄化要因130ベーシスポイントを除くと13.6%となり、比較可能なベースで20ベーシスポイント上昇した。

グローバル・リジッド・パッケージング・ソリューションズ

売上高は為替変動の影響を除いたベースで2%増加した。販売数量は前年同期比2%増加し、前期比で150ベーシスポイント改善した。原材料の価格転嫁が売上高を4%押し上げた一方、事業売却により売上高が4%減少した。

調整後EBITは為替変動の影響を除いたベースで3%減の3億300万ドルとなった。事業売却の影響を除くと、調整後EBITは約3%増加した。調整後EBIT利益率は10.9%で、価格転嫁による希薄化要因50ベーシスポイントを除くと11.4%となり、比較可能なベースで20ベーシスポイント低下した。

成長はAmcorの注力カテゴリーで最も顕著であり、販売数量は3%増加した。経営陣はペットフードと外食・フードサービスを強調したほか、ビューティー＆ウェルネス、飲料・液体、ヘルスケアもプラスの販売数量を記録した。プロテイン分野は横ばいだった。

全地域で販売数量が増加した。新興国市場の成長は中国が牽引し、10億ドル超の売上高を生み出す事業において1桁台後半の成長を報告した。Amcorは中国で生産能力を増強しており、新興国市場において中長期的に1桁台半ばの成長を達成することを目指している。

商業面での成長シナジー獲得額は年間売上ベースで1億7000万ドルに達した。経営陣は、当初の3年間目標である2億8000万ドルを最終的に上回ると引き続き確信している。

経営陣の業績ガイダンス

Amcorは、移行期間の調整後EPSガイダンスを従来の1.80〜1.90ドルから1.70〜1.80ドルへと引き下げた。経営陣は、加速するエネルギーおよび物流コスト（特に9月四半期の終盤に生じたコスト）の回収時期のずれが下方修正の理由であるとした。

同社は、移行期間末のレバレッジ比率を約3.6倍と予想している。また、経営陣は移行期間のフリーキャッシュフローについて、12月四半期に約8億ドルのプラスのフリーキャッシュフローを見込み、第1四半期の流出を相殺することで概ねニュートラルになると予想している。

2027年（暦年）について、経営陣は以下を予想している：

• オーガニック販売数量のプラス成長。
• 調整後EPSの2桁成長。
• 緩やかな販売数量の成長とシナジー創出に支えられた、1桁台半ばの調整後EBITDA成長。
• 年末時点でのレバレッジ比率約3倍。
• 中東情勢に関連する5億ドルの運転資本への影響を2027年末までに回収。
• 3年間で6億5000万ドルのシナジー目標の大半を2027年末までに達成。

経営陣は、価格設定と生産性向上策によって12月四半期末までに原材料以外の現在のインフレに対応し、現在特定されているインフレによる2027年への実質的な影響はないと予想している。

リスクと注視すべきポイント

エネルギーおよび物流のインフレは、最も直接的な利益圧迫要因となっている。経営陣は12月四半期に1億ドル以上の総影響額を見込んでおり、その約半分が相殺されると予想している。回収できるかどうかは、契約に基づく価格転嫁メカニズム、市場価格の引き上げ、コスト削減策にかかっている。

Amcorは、中東紛争の影響により、在庫および売掛金全体で約5億ドルの追加の運転資本を抱え続けている。経営陣は12月四半期における回収はわずかにとどまると見込んでおり、現金創出効果は主に2027年に現れるとみている。

消費者の購買力は依然として厳しい状況にあり、経営陣はさらなるインフレが需要に影響を与える可能性があると認識している。顧客企業は、プロモーション、イノベーション、パッケージ・価格体系を通じて価格と販売数量のバランスをとっている。

レバレッジ比率3倍への道筋は、現在の状況と概ね同様の事業環境を前提としている。樹脂価格のさらなるインフレは運転資本の回収を遅らせる可能性がある一方、価格下落は回収を加速させる可能性がある。

アナリストQ&Aの要点

• 販売数量のモメンタム：経営陣は、10月の販売数量動向が9月四半期と概ね同水準であり、2027年のオーガニック成長への期待を裏付けるものだと述べた。
• インフレの回収：エネルギーおよび物流コストのエクスポージャーの半分以上は契約上のメカニズムを通じてカバーされており、残りは追加的な価格改定によって対処されている。調達、サプライヤー構成、輸送積載効率の見直しも進められている。
• キャッシュフローとデレバレッジ：レバレッジ比率3倍への道筋には、1桁台半ばのEBITDA成長、約18億ドルの正常化されたキャッシュフロー、そして5億ドルの運転資本の逆風の回収が含まれている。
• プライベートブランド：Amcorは主に北米と欧州に焦点を当てた専門チームを立ち上げた。経営陣は、商談パイプラインは心強いものの、グローバルアカウント向け施策ほどには成熟していないと説明した。
• ポートフォリオ施策：特定された6件の事業売却案件のうち5件が完了し、最後の案件も間もなく完了するとされている。当初の想定より時間がかかっているものの、経営陣は北米の飲料事業の売却に引き続き取り組んでいる。
• 統合費用：Amcorは、6億5000万ドルのシナジー目標を支えるために当初特定された2億8000万ドルのうち、1億9000万ドルを支出した。経営陣は12月四半期にさらに2000万〜3000万ドルの支出を見込んでおり、その後の残額は約6000万ドルとなる。

決算説明会トランスクリプト全文

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

Good morning, thank you for joining us, and welcome to the conference call for Amcor's Quarter Results ended September 30, 2026. 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 earnings call for the quarter ended September 30, 2026. 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 statement on Form 10-K and 10-Q for further details.

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

Peter Konieczny

Thank you, Kate, and thanks to everyone for joining us today. I'll begin with safety, which remains a core value at Amcor. We are pleased with the progress we have made in improving the safety performance of the combined organization. We remain focused on delivering industry-leading performance as we work to build on our strong track record in safety.

Turning to Slide 4, which highlights our key messages for today. This quarter, we delivered solid operating results as we effectively managed the challenges presented by a volatile inflationary environment, which is now extended beyond resins to include nonraw material costs such as higher energy and distribution costs. First, we were pleased to see broad-based positive 1% organic volume growth in the quarter, led by 3% volume growth in the focus categories.

Adjusted EPS of $0.95 was flat to prior year on a constant currency basis as expected after adjusting for the impact of divestitures. Second, the synergies of $60 million across procurement, SG&A, operations and commercial growth were in line with our expectations. We remain confident in delivering the $130 million target for the transition period and $650 million over the 3-year period. Third, today, the Board approved a modest increase in the quarterly dividend to $0.66 per share, which reflects ongoing confidence in our business momentum and disciplined approach to capital allocation.

And fourth, we're updating our adjusted EPS outlook for the transition period to a range of $1.70 to $1.80 per share from our previous expectation of $1.80 to $1.90 per share. Since the onset of the Middle East crisis in March, we have been navigating a dynamic operating environment, which is creating volatility and raw material input costs. We took swift action to ensure continuity of supply for our customers while responsibly managing cost and pricing to counter these inflationary pressures.

Notably, we passed through higher resin costs totaling $435 million in this quarter. Now we have also seen an acceleration in nonraw material input costs such as energy and distribution costs, particularly in September. This is creating a headwind during the transition period related to the timing of the pass-through of these incremental costs.

We're actively addressing these higher costs over the coming months with price and cost actions and do not expect this incremental inflation will negatively impact our results in 2027.

Moving to Slide 5. As I mentioned earlier, we delivered another quarter of positive organic volume growth with volumes up 1%. Notably, this represents the fourth consecutive quarter of sequential improvement. We continue to see particularly good momentum in the areas we have identified as priorities for growth, beginning with broad-based 3% volume growth in the focus categories. These are attractive categories that are indexed to growth and where we have a leadership position.

I'd like to highlight our performance in 2 focus categories this quarter. Growth in pet food is driven by innovative sustainable barrier packaging solutions as we win with some of the largest and fastest-growing brands. In Food service, growth is driven by our product leadership and fully recyclable polypropylene cups, lite containers, which is translating into new QSR wins. We're also pleased to see positive volumes in beauty and wellness, liquids and health care. Protein was flat.

Across regions, volumes increased in all geographies. Growth in emerging markets was led by China, where we have a broad product portfolio across food, health care and beauty and strong engagement with our customers. We're adding to our manufacturing capacity, which will help us maintain proximity to demand and drive growth. We're also enhancing our focus on targeted customer relationships, including global accounts, where we delivered solid growth this quarter. These customers, especially value our service, quality and demonstrate a track record of ensuring continuity of supply through periods of industry disruption.

Our leadership in sustainability and innovation are also driving wins with these accounts. as we deliver fully recyclable product solutions that will help our customers minimize fees from new packaging regulations. Within private label, we've recently established a new organization dedicated to expanding our relationships with large retailers and co-packers in North America and Europe. We're encouraged by the pipeline of opportunities they are building as they work towards multiyear growth targets and we're gaining traction with our growth synergies, leveraging our comprehensive product portfolio, extensive customer relationships and global reach.

These new business awards now total $170 million in annual sales, and we remain confident we will exceed our initial 3-year target of $280 million in growth synergies over time. While it is still early, we are encouraged by the progress. The growth we are seeing is not just in a few areas, but across categories, geographies and customers. That gives us confidence that our growth strategy is gaining traction and that we are well positioned to deliver sustainable organic growth over time.

Turning to Slide 6 and our financial results for the quarter. The business generated quarterly revenue of $6.1 billion, which increased 7% over prior year driven by volume growth of 1% and the pass-through of raw material costs. When excluding the impact of divestitures and currency fluctuations, adjusted EBITDA of $883 million was flat to prior year, while adjusted EBIT increased 3%. Adjusted EPS of $0.95 was at the midpoint of our outlook range, with volume growth and synergy capture offset by the expected rebuild and incentive compensation and increased inflation, specifically energy and distribution costs.

Leverage of 3.76x increased from the fourth quarter, in line with seasonal trends. Turning to Slide 7. As I mentioned earlier, we delivered synergies of $60 million in the quarter, in line with our expectations. While we continue to capture procurement and SG&A synergies, growth and operational synergy capture is accelerating as expected.

As we look ahead, we remain committed to achieving our 3-year $650 million synergy target through a combination of cost synergies and commercial growth.

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

Stephen Scherger

Thank you, PK. Moving to Slide 8. Net quarterly sales of $5.6 billion in our core portfolio benefited from broad-based volume growth of approximately 1.5% as well as the pass-through of raw material costs. Excluding the impact of divestitures, EBIT increased 3% on a constant currency basis and EBIT margins were 11.9%. EBIT margins were 12.8% after excluding the 90 basis point dilution related to increased sales dollars associated with passing through higher raw material costs, in line with the prior year.

Turning to Slide 9 and the Global Flexible Packaging Solutions segment. Sales increased 10% on a constant currency basis, driven by the pass-through of $316 million in higher raw material costs. Volumes were flat to prior year. Excluding volume from the sale of unconverted films in North America, volumes were up approximately 1%. Volumes were up modestly in North America Europe and Asia Pacific, while down modestly in Latin America.

Adjusted EBIT was up 1% on a constant currency basis to $414 million, driven by synergy capture partly offset by the incentive compensation rebuild and higher inflation. Adjusted EBIT margin of 12.3% was impacted by 130 basis point dilution related to increased sales dollars associated with passing through higher raw material costs. Excluding this impact, adjusted EBIT margin was 13.6%, which was up 20 basis points to prior year on a comparable basis.

Moving to Slide 10 and the Global Rigid Packaging Solutions segment. Sales increased 2% on a constant currency basis. Volumes were up 2% versus prior year and up 150 basis points sequentially. Pass-through of higher raw material costs drove a favorable impact to net sales of 4%, while divestitures drove an offsetting unfavorable impact of 4%. Adjusted EBIT declined 3% on a constant currency basis to $303 million.

Excluding divestitures, adjusted EBIT was up approximately 3% compared to prior year, driven by higher volumes and synergy capture, partly offset by the incentive compensation rebuild and higher inflation. Adjusted EBIT margin of 10.9% was impacted by 50 basis point dilution related to increased sales dollars associated with passing through higher raw material costs. Excluding this impact, adjusted EBIT margin was 11.4%, which was down 20 basis points to prior year on a comparable basis.

Turning to the cash flow and balance sheet on Slide 11. After funding $31 million of very transaction, restructuring and integration costs, free cash outflow for the quarter was $820 million. Capital expenditures of $301 million were higher than prior year period, driven by investments in short- and long-term growth initiatives. We continue to see approximately $500 million in increased working capital across inventories and receivables due to the Middle East conflict.

We are implementing initiatives to drive structural improvements to working capital and expect to recover the $500 million by the end of 2027. Leverage at quarter end was 3.76x, which increased from the fourth quarter, in line with seasonal trends. We continue to expect leverage to be approximately 3x by the end of calendar year 2027, driven by strong cash flow generation, underpinning our commitment to investment-grade credit ratings.

Moving to our transition period outlook on Slide 12. We are lowering our outlook for the transition period to a range of $1.70 to $1.80 per share from our previous expectation of $1.80 to $1.90 per share due to the timing of the pass-through of higher energy and distribution costs. We now expect our leverage at year-end to be approximately 3.6x. Starting late in the September quarter, we began experiencing an acceleration in nonraw material input costs. notably energy and distribution costs. In response, we are implementing productivity initiatives across the organization to help offset these cost pressures.

We are also taking price actions during the December quarter to offset known inflation. Through these measures, we expect to address the current inflationary trend by the end of this calendar year. As we reflect on our results this quarter, we are pleased with the underlying momentum in the business. It is clear that our growth strategy is working and that customers are responding to the enhanced value proposition that we bring to market as a leader in global consumer packaging. Thank you for your time today.

With that, I'll turn the call back to PK to discuss our perspectives on 2027 performance.

Peter Konieczny

Thank you, Steve. As we look ahead, we're confident that we're making the right investments to drive long-term sustainable volume growth, building on the momentum that we are seeing across our business, across geographies, customers and focus categories, we continue to expect positive volume growth next year. Our confidence in our synergy targets is also intact, and we expect to achieve the majority of the $650 million 3-year synergy target by the end of 2027. .

Taking all of this into account, we are expecting to deliver double-digit adjusted EPS growth in 2027, and we're targeting leverage of approximately 3x by year-end while continuing to modestly increase the dividend. Amcor remains resilient in the face of macro challenges. Our teams are focused on what we can control, executing with discipline and delivering for our customers. With that, we're now ready for questions.

Operator

[Operator Instructions] Your first question comes from the line of Ghansham Punjabi with Baird.

質疑応答

Ghansham Panjabi

PK, on your comments on the private label initiative, can you just give us a bit more color on that? In particular, is this a global initiative? Or is it more specific to a region such as the U.S. Private label has been obviously well penetrated for a very long time. So I'm just curious as to why now and also what your relative exposure is towards that channel versus the market average.

Peter Konieczny

Yes. Thanks, Ghansham. This is PK. It's a great question. I mean private label is 1 of the 2 customer groups, which we haven't focused. The other one is the really large, what we call global accounts. Another way to explain that is sort of the who is who of the CBT brands. which are large and global. But back to private label. We do have a pretty good participation in the private label segment. And we've been with them for a long period of time, but we have seen given the market environment and the particular situation of the consumer, the private label is one of the places where the market is winning or where customers are winning. So in terms of the large retailers, and the co-packers.

As we have seen that, and we've seen the growth in that subsegment, if you want, we have said we want to focus more and that is an initiative that focuses mostly on North America and Europe, where we drive initiatives in the way that we have now a dedicated team. We have stood up that team over the last couple of months. And that team is doing a fine job in establishing better relationships, broadening essentially our exposure to the participants in that field, and they're building a pipeline that we're pretty excited about.

It's obviously that initiative is a little less mature than the things that we're doing on the global account side, but the pipeline of opportunities is real, and we're looking forward to translating that as we go forward. Thank you.

Operator

Your next question comes from the line of John Purtell with Macquarie.

John Purtell

Look, just a bit more color on the energy and distribution cost impacts you're seeing. And you've sort of commented that you sort of expect no sort of ongoing impact into calendar 2017. I suppose the sort of timing of that, it seems like a pretty quick recovery and you're essentially not flagging any residual impact into the first half of next year? .

Peter Konieczny

Yes. Thanks, John. I'll start and then maybe Steve wants to add to that a little bit. Just to provide some context here. We have been talking about inflation on the raw material input side extensively, and we did that also on the call in August, where we were able to report a significant inflation hit us and we were able to offset that essentially without any delay. That continues to be the case, and we have seen more of that inflation on the raw material input side also in the September quarter with the same outcome. We've been able to offset that really well, and we continue to do a great job.

The inflation that is holding us back now in the December quarter, particularly is inflation that hits a different bucket of cost. And this is around the energy and distribution costs and all the other sort of P&L line items that get sort of impacted by higher energy and distribution. That's a different bucket. And we have different recovery mechanisms for that bucket. One recovery mechanism is also pass-through clauses that we have in contracts, more so on the legacy Amcor side of the business. We started to do a pretty good job after cover on that end. But there is also some part of the business, which looks a little bit more like the legacy Berry part where you recover these things through price increases in the market, which is exactly what we have done. We're acting in -- we're sort of pushing the price pass-through clauses that we have in the contract, and we're bringing price increases to the market, which we have done this quarter.

Now in terms of the pace of which we can recover, we believe that we will catch up with the pricing combined with obviously the responsible cost actions that we need to take because this is inflation that happens all the time, and our customers are expecting us to do all apart. So between our cost actions and the pricing that we need to bring to market, we think that we catch up by the end of the December quarter, which then gets us into a position that as of January 1, '27, we no longer have an impact based on the inflation that we are currently addressing.

Stephen Scherger

Yes. John, it's Steve. Thanks for the call and the question. Just the only thing to add to PK's thoughtful response there is that we saw the inflation kind of starting to come in pretty late in the September quarter and then started to immediately take price action. Some of it contractual, as PK said, and then some of it through incremental price actions that we're taking with customers starting in the quarter, the December quarter that we're in. So we're executing on that now, and that gives us confidence that we'll be in a position to minimize and have no real impact in 2027.

Operator

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

Ramoun Lazar

Just one on volumes. I mean your momentum in volumes looks to be accelerating. Just tend to get an idea, have those volumes continued into the December quarter. What are you seeing there from your customers? One thing we're sort of observing is that FMCGs are calling for pricing into calendar year '27, just given the inflationary pressures, does that concern you into the calendar year? Just to get your overall thoughts PK on that?

Peter Konieczny

Yes, Ramoun, thanks. I'll give you my thoughts. I mean, obviously, you're asking something that relates to our customer space, and you will hear from them also. Here's my take on where we stand. And maybe allow me to take a little bit of a step back. I mean, the overall environment is challenging for the consumer right now, and that's not new, right? The [indiscernible] stretched. We've talked about the affordability crisis and what we're now talking about is there's more inflation coming through to the marketplace and nobody needs more inflation at this point in time.

Now that said, I think it's important to consider 2 things here, which are happening on our side I in talking to customers believe that they are still very much focused on getting the balance right between price and volumes. And they have a few things at their hands and in their toolkits that they're driving. You can see promotional activities are still up when you look at Scan data in the U.S. Innovation is obviously always something they innovate themselves through this period. axis architecture is another 1 where they try to go ahead and meet the consumer at the price point which works for the consumer. So that's on the 1 side, something that is going to continue in the way that I read our customer base.

On the other hand, we have a very clear strategy in terms of -- or in order to facilitate growth, organic growth in our business. And that comes back to the focus categories to the emerging markets, to the customer groups that we just discussed where we're focusing on. And when I look at our performance there, and I will say, I see more and more areas where I can say with confidence that we're outperforming the market. So we're actually able to gain share. And that gives me the confidence to say that as we go forward into this quarter, I'll come back to that in a second, but also to '27 that we're expecting organic growth.

Now you had -- one part of your question was what are we seeing going into sort of the December quarter that would relate to October and the October volume performance is pretty much in line with what we've seen in the September quarter. So all good. Thank you.

Operator

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

George Staphos

My question is really on the cost hit. Again, if we can come back to it. Is there a way to size the gross amount of impacts from energy from distribution that is hitting you right now. And the proportion you're trying to offset that amount by your normal pass-throughs that might relate to those buckets, if there are any specific individual price actions that you're going out with right now, the cost outs how do those 3 things offset that cost hit? And if you could size that cost, that would be great.

One related point. Given the growth that you had in your focused categories, I would have expected your mix to be better -- so how is mix helping you offset that if it is at all?

Stephen Scherger

George, it's Steve. Let me try to touch touch on those. In terms of kind of the overall inflationary bucket that we chatted about that are distribution cost related, energy cost related for the quarter -- or excuse me, for kind of what we're seeing in this quarter, put it into the $100-plus million range gross with us roughly offsetting nearly half of that, if you will, in terms of the offset. And then inside of that, A little over half is naturally contractual in terms of how it's covered just in the normal contractual algorithms that cover these types of costs. And then the other half is us taking price actions, which we took in and have taken into the marketplace here in the quarter. So the body of work, contractual price increases as well as those that we're executing on where the contracts may not have those costs included, represents the actions that we're taking to offset that by the end of the calendar.

Yes. And then if you talk about the mix, you're right. We're actually very pleased with the growth in the focus categories at 3%. Those do tend to be modestly mix enhancing. If you look at our price mix, we saw some modest improvement from last quarter in terms of the overall price mix. We did -- some of that did get a little offset by, as we mentioned, some volume declines that we saw in our films business, which was -- has also some different mix implications.

But overall, George, I think -- we like the momentum that we're seeing on net price mix sequentially quarter-to-quarter and would expect that to enter positive benefits as we look out into '27 based upon the commentary just provided in terms of where we're seeing growth, focused categories, emerging markets, some key customer categories. So I hope that addressed it for you.

Operator

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

Matthew Roberts

I appreciate all the color Slide 8, if I look at the noncore performance, I think that implies it was down mid-single digits. What are some of the trends you're seeing in noncore, particularly in North America beverage and given the ongoing cost volatility, how is the pace or tone of the conversations around the strategic review changed.

Peter Konieczny

Yes. Thanks, Matt. This is PK. I'll give you -- I'll start and try to hit your question. So on the noncore side, we have had a bit of an impact on the business that Steve has just mentioned, which is the unconverted film business in North America due to a bit of a weaker volume situation in the September quarter without going further into the details in August, we said we didn't have any material pull forward into the June quarter. I think that's still true. But if I think now back and I look at the performance of the business, I think this is the business where we had some it didn't impact the enterprise materially overall. I mean, our volume performance is pretty much exactly where we guided towards in the September quarter.

The other question on the noncore side, particularly on the noncore side, sorry, the C&D business, obviously, is not noncore. I just want to make that clear. On the noncore side and touching maybe on the beverage business, we have a situation where -- the team has actually done a [indiscernible] job to stabilize the business. We like what they have done, which is really important also for the sales activities that we have. I think you implied a bit of a question around how is that going and where do we stand? What I can share with everybody is that these compensations are still ongoing. If I sit here today, I'd say probably it's taking a little longer than what we anticipated. But when I look at the overall market volatility and geopolitical volatility, I can get by it around that. And therefore, we remain committed. We continue to have these conversations have nothing more to share at this point in time. But once we have something, obviously, we'll update you immediately.

Stephen Scherger

And Matt, just to add to that part of the question, volumes the quarter in our -- in the noncore business were down kind of low to mid-single digits. So kind of consistent with some of the history that we've seen there. But overall performance was in line with our expectations, margins in line with the improvements that we've seen. And so as such, the business is performing consistent with our expectations and the business also has pass-through mechanisms in place that are offsetting the movements in the raw material, nonraw material costs. So it's similar to the rest of the company in that regard. So performance in line with our expectations. And that, of course, supports the process that we're still heavily embarked on. But those are just the financials that underpin, I think, the nature of your question.

Operator

Your next question comes from the line of Niraj Shah with Goldman Sachs.

Niraj-Samip Shah

I'm just putting a few of the questions together. I'm sort of just trying to get a handle on kind of the ex synergy operating leverage you see in the business. given we saw very different outcomes in kind of the June quarter versus the September quarter despite obviously a better volume momentum in the September quarter and impacted by those unrecovered costs. But how should we be thinking about kind of synergy leverage going into calendar '27 some modest volume growth.

Stephen Scherger

Yes, Niraj, it's Steve. I think if you kind of -- it's a very good question, by the way. If you look through the business, and it's what you were doing, and you kind of look past the positive synergies that we've captured. Some of the offsets that we've talked about, the incentive comp rebuild, the inflation that we're absorbing and then will recover, the baseline businesses performed in a consistent fashion. So steady this this quarter. And so while we did see some net favorable volume growth that we earned on, it was a bit offset by some of the inflation that we saw.

So in terms of our confidence in the leverage of the business to have synergy capture drop to the bottom line as we normalize into 2027 as well as volume growth to normalize. No change in what we see as the opportunity for EBITDA leverage based on low single-digit volume growth and synergy capture to drive kind of mid-single-digit EBITDA growth as we pivot into 2027.

Operator

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

Anthony Pettinari

I was wondering on free cash flow, if there's any kind of finer point or a way that we should think about the timing of this recovery of the $500 million plus working capital headwind, is this -- you had that kind of comment in the last quarters presentation. I'm just wondering if the headwind is kind of continuing to grow as you move through the quarter. Would you anticipate the recovery being maybe back-end weighted in calendar '27or just any way to kind of think about that recovery and obviously, kind of a dynamic situation.

Stephen Scherger

Yes, Anthony, it's Steve. Thanks for that. You're correct that the $500 million Middle East working capital impact remains. We didn't expect to see much progress in the September quarter, and we're not really looking for much progress in December, given that we're really still in a reasonably volatile environment. So from a -- from an outlook perspective, we're going to keep that relatively modest, and I'll talk about cash flow maybe separately here in a moment.

So yes, we do see recovery being primarily a 2027 positive for us from a cash impact for us. And so -- and as we mentioned in the commentary, kind of through 2027 and in place for a full recovery by the end of 2027. Looking at the current cash flow, kind of the quarter that just completed and our 6-month transition period, when we stood back and looked at the volatility in resin pricing that played out, during the quarter, up material April, May, down a bit in the July, August, September.

The free cash flow implications in the September quarter played out about as we expected. And as we look to the December quarter, we do expect to have positive free cash flow in the neighborhood of the $800 million that we had negative outflows in the first quarter, which will drive full year -- full -- excuse me, the transition period free cash flow to more of a neutral state, so in line with our expectations. -- because we're going to have positive working capital cash flow really across the categories as we get the natural positive cash inflection on our accounts receivable, just given how the natural seasonal top line plays out that generates cash for us in the December quarter.

We're going to see some positive inventory cash flow from the realities of how resin has moved down, partially down from the significant up and then we continue to structurally improve our accounts payable terms. So that's just also to give you a little line of sight to the free cash flow for the transition period, which is for the full transition period, we expect to be neutral, which drives the 3.6x leverage by the end of this transition period, end of the December quarter.

Operator

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

Jakob Cakarnis

Just to build on Anthony's question there. What's the confidence to get the financial leverage back to 3x over the next 12 months? Is it just as simple as the working capital normalizing. And there are other things that we need to think about there because it's been a goal that's been reiterated a few times. Obviously, you can't foresee the working capital buildup that's happened, but you interested to see this morning or this evening that you've reiterated that. I just want to get your confidence of that glide path, please? .

Stephen Scherger

Yes. Jacob, it's Steve. It's an important set of goals for us. And so we remain very committed to it. And as we look out and as we shared on the last call back in August, -- there's really 3 things that drive that movement to the 3x leverage by the end of 2027. One is that our EBITDA, adjusted EBITDA would grow at mid-single digits in 2027. And driven by modest volume growth and synergy capture. So that's an important attribute for getting to 3x, which is kind of mid-single-digit EBITDA growth. we'll generate our normalized cash flow from that EBITDA growth. And so think about that in kind of normalized cash flow in the $1.8 billion range. that's about $500 million to $600 million above our dividend. So that drives debt reduction.

And then recovery of the $500 million of working capital associated with the Middle East conflict. So those those overall are the critical enablers for the walk to the 3x. Obviously, there are some sensitivities that we're actively managing and looking to address because -- those are the -- those are the commitments that we are making around driving it to 3x. Obviously, we're in a pretty volatile environment. So we're active in our assessment of what levers do we make sure that we pull beyond what I just articulated to you. relative to getting to that 3x, which remains a critical goal for us. I appreciate that, Jacob.

Operator

Your next question comes from the line of Michael Roxland with Deutsche Bank.

Michael Roxland

Steve, back in 2024, when the Berry acquisition was announced, the company was targeting pro forma cash flow of around, I think, $3 billion plus including pro forma synergies and then ultimately, free cash flow of $2 billion to $1 billion in CapEx. Last year, you generated about $1.3 billion in free cash flow. Obviously, we had a lot of discussions on the working capital, I understand that issue. But can you help us bridge back to that $2 billion of free cash flow? Obviously, you're calling for, let's say, EBITDA growth due to modest volume growth, you have the synergies you've cost takeout, but you also have higher CapEx now 5% of sales, so call it $1.2 billion per year. And your in your net expansion also be a little bit higher just given the fact that you have to refi some of your long-term debt, I think 44%, 45% is maturing. -- between '26 and '28. So can you help us just bridge the $2 billion of free cash flow and what you need to do to get there? .

Stephen Scherger

Yes. No, thanks, Mike. Good to hear from you. I think I'll kind of start with kind of the leap off point. If you look at kind of the natural cash flow generation capabilities of the business today, sitting today, it's probably in the $1.7 billion plus or minus $1 billion range when you think about overall EBITDA is in the low [indiscernible] 7s and then roughly $2 billion in interest, taxes and CapEx to kind of drive towards those [indiscernible]. As I just mentioned, if you look out EBITDA growing at mid-single digits for the next couple of years will drive pretty substantial overall EBITDA improvement. So think about that measured in several hundred millions of dollars, which is an enabler of course, for cash flow generation that starts to move you toward and move us toward that $2 billion.

I think relative to your question on implied there on interest expense, really when we look out at interest expense here into 2027, as an example, we only have about $1.4 billion of debt that's that's coming mature. We're at 70% of our overall debt structure is is fixed. And as we drive debt balances down and leverage down, actual interest expense on a true year-over-year basis is not -- should not grow materially. I think if you look to 2027, it really should be up relatively modestly from kind of the calendar assumption around $610 million or so. And that, of course, will be driven by our debt reduction initiatives and a modest amount of interest debt that needs to be refinanced, which we have line of sight on doing that here over the coming months.

So I think it's the right question to be asking. Obviously, we're very thoughtful about CapEx. We've also been pretty clear that the 5% is what we want to invest in the business to drive that growth in terms of organic volume growth. That's a lever obviously that from a free cash flow generation perspective is one that we're thoughtful about it's not just a blind 5%. We'll make sure that we're very thoughtful on what CapEx we put to work to support our growth in the interest of debt reduction, leverage down to all the goals that we've shared. So I appreciate the question, Michael.

Operator

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

Hillary Cacanando

So your emerging market volumes grew about 2% this quarter. So given the additional capacity that you've been putting into markets like China, what level of growth do you think that portfolio can sustainably deliver and when should we expect to see the benefit from those investments?

Peter Konieczny

Yes. Hilary, it's PK. It's a great question. Overall, our portfolio is about with 20% engaging in the emerging markets. The 4 really big markets that we're focusing on as part of our strategy is really China, India, Brazil and Mexico. When we look across those 4 markets, particularly in the last quarter and also in the more recent past, we've seen actually over time some pretty good growth performance. We would once the emerging markets to outperform the developed markets, obviously. And what we're seeing is growth rates. If I just focus on China now because it's our biggest business that we have in the emerging markets, we're running a bit more than $1 billion business in China, we're seeing high single-digit growth rates in a market which is definitely not growing that quickly. So this is 1 other example where I can say with confidence, we are able to gain share to drive growth, which is encouraging.

To your point, how much are we expecting, I can say, definitely more than in the developed markets. I would love those markets to get to something in the mid-single-digit range in terms of growth. In some cases, we are there in a few cases we're not yet, but that's sort of what I'm expecting.

Operator

Your next question comes from the line of Nikolay Dale with Baron Joe..

Unknown Analyst

Maybe just on SG&A. So it sort of stepped up to [ $468 million ] in the quarter from [indiscernible] in the PCP, so sort of 8% growth year-over-year. I would have thought that this is maybe a lever you might pull in a tougher earnings environment. So I hope you can sort of help us understand what's driving that year-over-year growth? And then maybe how we should be thinking about your approach to SG&A spend going into 2027.

Stephen Scherger

Yes. Thanks, Nicolas, it's Steve. I think part of that is the incentive rebuild. And so that's an important part there. So I think if you adjust for that, roughly $20 million in the quarter. I would speak to a more modest growth profile there. And as we talked earlier, obviously, SG&A and control of our cost structure to match it with the realities of these markets. is a conversation we're having all the time as we should, which is to make sure that our cost structure is competitive that is balanced relative to our innovation efforts and the efforts we have to support our commercial activities around the world. but also that we're appropriately lean to support that. So I think we're certainly attentive to SG&A as an overall investment because that's what it is. But I think in terms of the actual math you're doing, there's probably an incentive rebuild adjustment I would make relative to those numbers. I don't know, PK, anything to add to that?

Peter Konieczny

No. I think, Nikola, you're asking a really good question. I mean given the current environment, as I said beforehand, we need to stay focused on cost. And we're making some good progress here in terms of the combination of synergy opportunities, particularly on G&A, which are coming together well, but that will continue to be an area of focus as we move forward given the operating environment -- thank you. .

Operator

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

Nathan Reilly

I just had a question just around, I guess, latest thinking on portfolio management. I know you've gone through a process of identifying asset divestments. I'm just curious to see whether there's been sort of any further evolution just around the strategy around other divestments or other ways that you could potentially support that a deleveraging target of sort of [indiscernible].

Peter Konieczny

Yes, Nathan, it's PK. I'll start. You're right. We have taken a look at the portfolio after the combination of the 2 companies. We have identified at the time a portfolio of companies that we said we probably find better owners too. We have executed against those entered into 6 transactions, 5 of them have closed. The last one is imminent. -- the 1 that's outstanding. I've made a few comments a moment ago here is essentially the North American beverage business, and that is live. At this point in time, I think we've got to pace ourselves. We want to make sure that we complete that set of targeted initiatives. And that is the priority.

Going forward, I think we have a core business, if I can call it that, which was actually very nicely organized with scaled businesses in very attractive end market segments that sends us up for a good opportunity of bolt-on acquisitions -- these are sizable acquisitions, but I would call them bolt-on given the scale and size of the company that we have now generated through the combination of legacy Amcor and Berry and there is multiple ones out there.

Whether you look upstream on the fill side, if you look into a protein as a business, if you look into health care, which is interesting. You can sort of go through that list and you can find targets. I will tell you that we are very, very committed to the investment-grade balance sheet. And from a capital allocation perspective, the focus remains on getting our leverage down into that 3x range.

Operator

Your next question comes from the line of Jeff Zekaukas with JPMorgan.

Jeffrey Zekauskas

In the quarter, you took a $62 million restructuring charge. Will that eventually be a cash outlay? And how much restructuring still needs to be done in order to reach your $650 million target. Is there more to go? And then finally, if you divested all of your nonstrategic EBITDA, would that be a divestment of about $100 million. .

Stephen Scherger

Jeff, it's Steve. Let me try to touch on those. In terms of the $60 million that you're referencing, roughly $30 million of that was associated with the Berry integration activities. And so with that $30 million, we're now at $190 million of spend. that we initially identified as being $280 million in total to capture the $650 million. So we've now spent $190 million. We would expect to spend another $20 million to $30 million here in the coming quarters, so the December quarter. So we're going to exit calendar '26. -- kind of think about it in the $210 million to $220 million range. which will leave roughly $60 million of spend to support that. So the number has stepped down quite materially on a year-over-year basis, and we'll continue to do so. The remaining $30 million were associated with some other initiatives actually associated with as PK was just talking about the divestiture activities that we're pursuing and some costs associated with that and some other onetime costs associated with the the change to our fiscal year as an example.

Overall, we have every expectation that those items some of which were cash some weren't in the quarter. But overall, the cash outlay for those items will continue to step down as we look forward.

Operator

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

Mark Wilson

Just wondering In this challenging environment, whether your scale does put you at a competitive advantage relative to some of your smaller competitors and what you're seeing on that front? .

Peter Konieczny

Yes, Mark, it's PK. I do believe that, that scale is an advantage right now. Let me try to I'll lay that out for you a bit. Some of our customers in an environment like this, when we've seen this several times, they turn back to more secure supply chains. And that requires scale. So that is when we have a natural attraction, and we see that. We see that customers prefer like very -- like solid suppliers that have delivered the service and the quality of product to them in the past and they stand for being able to doing that also through those very volatile times.

Obviously, sale also is a driver of efficiency throughout the system, which is something that also translates into advantages right now as we secure supply and as we fight inflation on the input side. Thanks for the question.

Operator

Your next question comes from the line of Stephen Anastasio with E&P.

Unknown Analyst

Just one on the leverage target, the 3x target by the end of next year. I've noted that some resin suppliers have been talking about further price increases in October and November, are you guys expecting additional working capital impacts in the March quarter and for that working capital benefit to be much more second half weighted. How do you currently see it?

Stephen Scherger

Yes, Stephen, it's Steve. I think in terms of the pathway to the 3x leverage target by the end of 2027, as we talked about kind of 3 dimensions there Middle, East working capital recovery and then obviously, the core cash flow generation. It assumes an environment relatively similar to that, which we're in today. So it's hard for us to speculate kind of up or down. And so obviously, as you know, if you see inflation, there's some impact on the timing of recovery if you see deflation it accelerates it. So if there was movement, which is like you're saying, I think is hard to predict at this point, and it's hard for us to predict as well, so we don't it would have some potential timing implications, but no changes to the intended outcome either direction, either if it's inflated or deflated. I hope that helps with the questions. So thank you

Operator

Your next question comes from the line of Justin Barratt with CLSA.

Justin Barratt

I guess one of the key takeaways post the Berry merger was around you guys potentially being able to achieve a 1 percentage point above sort of market growth in your core portfolio. I just wanted to understand where are you at or where were you at do you feel in that most recent quarter? And if you are getting that 1% or if you're not just yet, when do you think it can be achieved? And how important is, I guess, a moderation in, I guess, the broader macroeconomic pressures important to achieving that target?

Peter Konieczny

Yes.. Thanks, Justin, it's PK. You're right. The target was something about 1% above market. if you'd ask me -- or before I tell you where we think we are today, let me tell you this, we also said when we did the acquisition that we are going to take some time in order to get there. the financial model was such that we said the synergies will drive double-digit EPS growth. And in that period of synergy realization, which was up to 3 years, we would have an opportunity to strengthen the volume profile, which then takes over as the synergies they sort of app off. That was the idea.

Now we're about 18 months into the acquisition. And I think where we are today, very honestly and trying to see it like it is, and tell like it is I think we can confidently say that we are definitely moving with market, which has improved a bit over the last couple of quarters. But what's important is that we're seeing more and more of those areas where we're actually operating ahead of market. And I made those examples of foodservice and pet care in the prepared comments in the Q&A session, I talked about China. And we're seeing more and more of those areas. I believe when will we get to the full realization of the potential on the top line relative to market I think '27 is a pretty interesting landmark for us as we walk through '27. I said before, '27 is sort of the first cleaner year after the acquisition of Berry. And I would like to see us make some more progress and develop some consistent volume performance as we go forward, obviously. And '27 is going to be important.

Operator

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

George Staphos

PK and Steve, related to the process with the noncore assets and the large one, obviously, that you've been working on recognizing that it's in motion. Does there come a time where it would possibly be come back to being a core asset? In other words, either the time period under the valuation suggests that it stays in the portfolio. And -- is there a mile marker out there where you would consider that or have us sort of think about that?

And then back to my earlier question, can you talk about some of the temporary or immediate cost actions you're taking to offset the pressure in distribution and energy.

Peter Konieczny

Thanks, George. I'll give you a high level on the noncore at this time. I'm not going to confuse it with our specialty business, which I did on the earlier question, I apologize for that. And then maybe Steve wants to add to the latter part of your question. It's hard once you've done the strategic assessment of the business to swing from a noncore assessment or a core assessment. That's hard. So you make the assessment, you call business noncore for good strategic reasons, which we laid out at the time. That continues to be the case.

And to the point of executing against our plan. As I said beforehand, the discussions are live. So I think we are not going to get into that situation. and I don't want to speculate in any other way right now. So our target remains. We want to sell that business, find a better owner to it and then move on. So that's on the first part of your question. With that, I'll hand it off to Steve.

Stephen Scherger

Yes. And George, in terms of cost actions, they would be the things you would expect to hear from us. I mean every time we see inflation on on an item as always in terms of our productivity. But in particular, when you see something around distribution or all distribution related it gives you an opportunity to take a very hard look instantly around your procurement initiatives, the supplier initiatives in terms of the mix of who you're doing work with, et cetera. So you kind of doubled down on those efforts. And then you -- as always, you take a really hard look particularly in the world of distribution around are you at full truckload, are you utilizing the most effective rates, if you will, in terms of how you're moving things around. So so much of this is diesel movement oriented. It's not really inventory. It's real cost.

And so our procurement teams and our operating teams just do a great job of really raising the bar on okay, something really started to move against us. let's make sure that we're doing our part to offset those and then obviously pass appropriately along to our customers. But it's on us to make sure that we are confident that we're at the lowest cost available for those items, such particularly around freight oriented, diesel-oriented distribution oriented, which have moved, as you know, up quite materially. So thanks for following up on that George.

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. Thanks, Matt, and thanks, everybody, for joining the call today. Look, I keep it very short. I just want to say, it's a very volatile environment out there. We delivered solid operating results this quarter. And we shouldn't be forgetting what's really important here. The volume growth of 1% was encouraging. Center realization was in line with our expectations. And on the back of that, we're here and we remain confident that we can deliver on the medium and long-term commitments. Thank you very much. Look forward to engaging with you soon.

Operator

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