Amcor’s flexibles business to double in size in Alcan deal

In its annual report published this morning, Amcor said Western Europe would account for 37% of sales once its US$2bn (£1.2bn) acquisition of four Alcan packaging divisions – Food Europe, Food Asia, Global Pharmaceuticals and Global Tobacco – goes through.

North America will be the group’s second biggest market, accounting for some 30% of sales, while Australia and New Zealand will represent 15% of the group’s combined A$14bn (£7.5bn) turnover.

Flexible packaging, meanwhile, will make up 46% of sales and the size of the business will more than double to cover 111 plants in 30 countries with sales of A$6.6bn (£3.5bn), compared to A$2.7bn currently.

The group’s tobacco business will also double in size, to represent A$1.3bn (£700m) in sales across 21 plants in 16 countries. It will represent around 9% of the combined group’s sales.

Elsewhere, the group’s PET business will make up 24% of sales, followed by non-flexibles in Australia (13%) and Amcor’s Sunclipse corrugated business in north America (8%).

In today’s report, Amcor managing director and chief executive Ken MacKenzie said that the acquisition targeted the group’s planned growth areas of flexible packaging and tobacco cartons and would “create leanding global positions” for in those areas.

In its review of its Flexibles business – which covers food, healthcare and tobacco packaging – the group said that its Flex 1 programme had achieved savings that would help cancel out the drop-off in volumes caused by the economic crisis.

However, the company said that while it had benefited from lower raw materials costs in the 2008/9 financial year, it would lose out on that benefit in the coming year as contracts would be repriced to reflect lower resin prices.

In the report, the company said that Flex 1 “delivered benefits during the 2008/09 year and these are expected to increase in 2009/10, which will help mitigate the combined impacts of slower economic activity and the absence of benefits from lower resin costs.”

Key measures in Flex 1 have included the reduction in the number of Amcor’s extrusion sites in Europe from nine to three, the closure or sale of a number of sites in western Europe and the reweighting of the business towards central and Eastern Europe.

Measures have included the closure of a plant in Derbyshire in 2007 and the opening of a new site in Poland, which came onstream in May.

The group also sold its AF Camvac barrier film site in September 2008 and in a separate transaction earlier in 2008 sold two plants in Somerset and in Lund, Sweden to management, who rebranded the businesses as Flextrus.

Click here to download Amcor’s 2009 annual report

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