Buying Amcor (AMC) & reducing Ampol (ALD)
Amcor is a global packaging company supplying a broad range of rigid and flexible packing products into the food, beverage, health care, home & personal care, and specialty cartons packaging industries. Amcor offers a well-balanced global footprint across the developed markets (primarily North America and Western Europe) and emerging markets (including China and India).
The Bemis acquisition (acquired 2018) has enhanced its position in flexible packaging and is delivering synergy benefits ahead of expectations. AMC is well placed to deliver total cost synergies of $180m by the end of fiscal 2021.
AMC delivered a solid 1H21 result and raised its guidance for fiscal 2021. Volume growth of 3% was supported by stronger performances in its beverage and grocery channel (benefitting from elevated home consumption) offset by weakness in healthcare demand due to lower elective surgeries.
Amcor upgraded its FY21 guidance to 10-14% adjusted EPS growth from 7-12% and announced a further US$200m buyback.
AMC is a defensive global packaging provider that is delivering low double-digit earnings growth and a dividend yield of ~4%.
We have reduced our overweight position in Ampol (ALD) to fund the new position in Amcor (AMC), which provides a more defensive earnings profile and higher dividend yield for the Australian Income portfolio.