Amcor Lowers Transition-Period EPS Outlook Despite Q1 Volume Growth

Amcor plc (NYSE: AMCR) lowered its adjusted earnings outlook for the six-month transition period ending December 31, 2026, citing the timing of passing through higher energy and distribution costs. The packaging company now expects adjusted earnings per share of $1.70 to $1.80, compared with its previous expectation of $1.80 to $1.90, even as first-quarter volumes grew and integration synergies remained on track.

For the quarter ended September 30, 2026, Amcor reported net sales of $6.1 billion, up 7% year over year. Adjusted EBITDA was $883 million, flat from the prior year on a comparable constant-currency basis excluding divestments, while adjusted EBIT increased 3% to $689 million on the same basis. Adjusted EPS was $0.95, also flat year over year on a comparable constant-currency basis and excluding a three-cent impact from divestitures.

Organic volumes increased 1%, marking a fourth consecutive quarter of sequential improvement, according to the presentation. Volumes in Amcor’s focus categories rose 3%, led by pet food and foodservice. Beauty and wellness, liquids and healthcare also recorded growth, while protein volumes were unchanged. Emerging-market volumes increased 2%, led by China.

The core portfolio generated $5.6 billion of net sales and delivered volume growth of about 1.5%. Core adjusted EBIT rose 3%, with an adjusted EBIT margin of 12.8% after excluding a 90-basis-point dilution from higher sales associated with raw-material cost pass-throughs. The total company’s adjusted EBIT margin was 12.1% on the same basis.

Segment performance

Global Flexible Packaging Solutions reported net sales of $3.36 billion, up 10% on both a reported and constant-currency basis. The increase included an approximately $316 million benefit from passing through higher raw-material costs. Volumes were flat overall but increased 1% excluding unconverted films.

The segment’s adjusted EBIT rose 1% to $414 million. Amcor said synergies were partly offset by the rebuilding of incentive compensation and the timing of recovering higher energy and distribution expenses. Adjusted EBIT margin was 12.3%, or 13.6% excluding dilution from raw-material cost pass-throughs, compared with 13.4% a year earlier.

Global Rigid Packaging Solutions recorded net sales of $2.77 billion, up 3% as reported and 2% in constant currency. Volumes increased 2%. Divestitures reduced sales by about $107 million, while raw-material cost pass-throughs added approximately $119 million. Excluding non-core and divested businesses, sales rose about 10% and volumes increased about 4%.

Rigid Packaging adjusted EBIT declined 3% to $303 million, including an approximately $17 million adverse effect from divestitures. Excluding divestitures, adjusted EBIT increased 3% as synergies and organic volume growth were partly offset by incentive costs and the timing of energy and distribution cost recovery. The segment’s adjusted EBIT margin was 10.9%, or 11.4% excluding raw-material pass-through dilution, versus 11.6% in the prior-year quarter.

Synergies and portfolio actions

Amcor delivered about $60 million of pre-tax synergies during the quarter, including approximately $10 million of financial synergies and $50 million from general and administrative expenses, procurement, operations and growth initiatives. The company expects a further $70 million in the December quarter and continues to target $130 million for the full transition period.

The company reaffirmed its three-year synergy target of $650 million following the Berry Global combination. It said fiscal 2026 synergies totaled about $285 million, roughly 10% above its original first-year expectation of $260 million. Management expects all synergy actions to be completed by the end of calendar 2027, with the majority of the $650 million target achieved by then.

Amcor also said it had agreed to sell six businesses for a combined transaction value of about $500 million, with five transactions completed. Acquisition-related commercial wins had reached approximately $170 million in annualized revenue to date.

Cash flow, leverage and shareholder returns

Free cash flow was negative $820 million, compared with negative $343 million a year earlier. Adjusted free cash flow was negative $789 million, reflecting a larger working-capital outflow that Amcor attributed to resin-price volatility related to the Middle East conflict. The company expects to recover more than $500 million of related cash-flow effects by the end of calendar 2027.

Net debt stood at $14.01 billion at September 30, while leverage was 3.76 times, in line with the company’s expectations. Amcor now expects leverage of about 3.6 times at December 31, compared with its previous range of 3.5 to 3.6 times. It continues to target leverage of approximately 3.0 times by the end of 2027 and said it remains committed to investment-grade credit ratings.

The board declared a quarterly dividend of $0.66 per share, a 1.5% increase from the prior year. Amcor said it intends to continue modestly growing the dividend.

For calendar 2027, management maintained its expectation for organic volume growth and double-digit adjusted EPS growth. It said actions are underway to address energy and distribution cost pressures and expects no impact on 2027 results from the pass-through timing that affected the transition-period outlook.

Amcor cautioned that its projections remain subject to heightened uncertainty from geopolitical developments and other factors. Identified risks include shifts in customer demand, integration execution, raw-material and energy volatility, supply disruptions, foreign-exchange movements, indebtedness, interest rates and the outcome of portfolio optimization efforts.