Amcor plc

Results of Operations - Three Months Ended December 31, 2023

Consolidated Results of Operations

Net sales decreased by $391 million, or 11%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. Excluding the positive currency impacts of $72 million, the negative impacts from the pass-through of lower raw material costs of approximately $30 million, and the negative impact from the disposed Russian business of $85 million, the remaining variation in net sales for the three months ended December 31, 2023 was a decrease of $348 million, or 10%, reflecting lower volumes.

Net income attributable to Amcor plc decreased by $325 million, or 71%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022, mainly due to the non-recurrence of a pre-tax net gain of $215 million on disposal of the Russian business in the three months ended December 31, 2022, a decrease in gross profit of $41 million, a decrease in other income of $34 million, an increase in restructuring and related expenses, net, of $22 million, and higher net interest expense of $10 million.

Diluted earnings per share ("Diluted EPS") decreased by $0.215, or 70%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022, with the net income available to ordinary shareholders of Amcor plc decreasing by 71% due to the above items and the diluted weighted average number of shares outstanding decreasing by 3%. The decrease in the diluted weighted average number of shares outstanding was largely due to the repurchase of shares under previously announced share buyback programs.

Segment Results of Operations

Flexibles Segment

Net sales decreased by $331 million, or 12%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. Excluding the positive currency impacts of $63 million, the negative impacts from the pass-through of lower raw material costs of approximately $45 million, and the negative impact from the disposed Russian business of $85 million, the remaining variation in net sales for the three months ended December 31, 2023 was a decrease of $264 million, or 9%, reflecting sales from acquired businesses of 1% and unfavorable volumes of 10% as a result of persistently broad based lower market and customer demand as well as accelerated destocking, particularly in December.

Adjusted earnings before interest and tax ("Adjusted EBIT") decreased by $41 million or 12% for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. Excluding positive currency impacts of $6 million and the negative net impact from the disposed Russian business of $29 million, the remaining decrease in Adjusted EBIT for the three months ended December 31, 2023, was $18 million, or 5%, reflecting the net negative effect of 6% from unfavorable volumes and favorable operating cost performance, partially offset by favorable price/mix of 1%.

Rigid Packaging Segment

Net sales decreased by $60 million, or 7%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. Excluding the positive currency impacts of $10 million and the positive impact from the pass-through of higher raw material costs of approximately $15 million, the remaining variation in net sales for the three months ended December 31, 2023 was a decrease of $85 million, or 10%, reflecting price/mix benefits of 2% and unfavorable volumes of 12% predominantly reflecting an incremental weaker consumer and customer demand and significant destocking.

Adjusted EBIT decreased by $6 million, or 11%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. Excluding the positive currency impacts of $1 million, the remaining variation in Adjusted EBIT for the three months ended December 31, 2023 was a decrease of $7 million, or 12%, reflecting the net negative effect of 29% from unfavorable volumes and favorable operating cost performance, partly offset by favorable price/mix of 17%.

Consolidated Gross Profit

Gross profit decreased by $41 million, or 6%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. The decrease was primarily driven by the impact of the disposed Russian business and lower volumes. Gross profit as a percentage of sales increased to 19.1% for the three months ended December 31, 2023, driven by an improvement in operating cost performance.

Consolidated Research And Development Expenses

Research and development expenses increased by $4 million, or 17%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. The increase was due to continued investment in our research and development organization to further progress towards our innovation and sustainability goals.

Consolidated Restructuring and Other Related Activities, Net

Restructuring and other related activities, net, changed by $237 million for the three months ended December 31, 2023, compared to the three months ended December 31, 2022. The change was mainly a result of a pre-tax net gain of $215 million on the disposal of the Russian business in three months ended December 31, 2022 and an increase in restructuring and related expenses, net, of $22 million, primarily related to the 2023 Restructuring Plan.

Consolidated Other Income/(Expenses), Net

Other income/(expenses), net changed by $34 million, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022, primarily from the adverse impact of the devaluation of the Argentine Peso.

Consolidated Interest Expense

Interest expense increased by $10 million, or 13%, for the three months ended December 31, 2023, compared to the three months ended December 31, 2022, driven primarily by increased variable interest rates.

Consolidated Income Tax Expense

The provision for income taxes for the three months ended December 31, 2023 and 2022 is based on our estimated annual effective tax rate for the respective fiscal years, and is applied on income before income taxes and equity in loss of affiliated companies, and adjusted for specific items that are required to be recognized in the period in which they are incurred.

The effective tax rate for the three months ended December 31, 2023 increased by 10.3 percentage points compared to the three months ended December 31, 2022, prima rily due to the difference in the magnitude of discrete events in both periods, mainly driven by tax benefits attributable to the disposal of the Russian business in the three months ended December 31, 2022.

Results of Operations - Six Months Ended December 31, 2023

Consolidated Results of Operations

Net sales decreased by $660 million, or 9%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022. Excluding the positive currency impacts of $154 million, the negative impacts from the pass-through of lower raw material costs of approximately $85 million, and the negative impact from the disposed Russian business of $156 million, the remaining decrease in net sales for the six months ended December 31, 2023 was $573 million, or 8%, reflecting favorable price/mix of 1% and unfavorable volumes of 9%.

Net income attributable to Amcor plc decreased by $405 million, or 59%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022, mainly due to the non-recurrence of the pre-tax net gain of $215 million on disposal of the Russian business in the six months ended December 31, 2022, a decrease in gross profit of $64 million, a decrease in other income of $54 million, an increase in restructuring and related expenses, net, of $49 million, and higher net interest expense of $35 million.

Diluted earnings per share decreased by $0.263, or 57%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022, with the net income available to ordinary shareholders of Amcor plc decreasing by 58% due to the above items and the diluted weighted average number of shares outstanding decreasing by 3% for the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The decrease in the diluted weighted average number of shares outstanding was due to the repurchase of shares under previously announced share buyback programs.

Segment Results of Operations

Flexibles Segment

Net sales decreased by $542 million, or 10%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022. Excluding the positive currency impacts of $135 million, the negative impacts from thepass-through of lower raw material costs of approximately $90 million, and the negative impact from the disposed Russian business of $156 million, the remaining variation in net sales for the six months ended December 31, 2023 was a decrease of $431 million, or 8%, reflecting price/mix benefits and sales from acquired businesses of 1% and unfavorable volumes of 9%, mainly reflecting persistently lower market and customer demand and accelerated destocking in the second quarter of fiscal year 2024.

Adjusted EBIT decreased by $72 million, or 10%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022. Excluding positive currency impacts of $13 million and the negative net impact from the disposed Russian business of $50 million, the remaining decrease in Adjusted EBIT for the six months ended December 31, 2023, was $35 million, or 5%, reflecting the net negative effect of 13% from unfavorable volumes and favorable operating cost performance, partly offset by favorable price/mix of 8%.

Rigid Packaging Segment

Net sales decreased by $118 million, or 7%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022. Excluding the positive currency impacts of $18 million, the positive impact from the pass-through of higher raw material costs of approximately $5 million, the remaining variation in net sales for the six months ended December 31, 2023 was a decrease of $141 million, or 8%, reflecting price/mix benefits of 1% and unfavorable volumes of 9%, predominantly reflecting a combination of lower consumer and customer demand, as well as destocking, particularly in the second quarter of fiscal year 2024.

Adjusted EBIT decreased by $10 million, or 8%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022. Excluding the positive currency impacts of $1 million, the remaining variation in Adjusted EBIT for the six months ended December 31, 2023 was a decrease of $11 million, or 9%, reflecting the net negative effect of 24% from unfavorable volumes and favorable operating cost performance, partly offset by favorable price/mix of 15%.

Consolidated Gross Profit

Gross profit decreased by $64 million, or 5%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022. The decrease was primarily driven by the impact of the disposed Russian business and lower volumes. Gross profit as a percentage of sales increased to 18.9% for the six months ended December 31, 2023, driven by favorable price/mix and an improvement in operating cost performance.

Consolidated Research And Development Expenses

Research and development expenses increased by $6 million, or 12%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022. The increase was due to continued investment in our research and development organization to further progress towards our innovation and sustainability goals.

Consolidated Restructuring and Other Related Activities, Net

Restructuring and other related activities, net, changed by $264 million for the six months ended December 31, 2023, compared to the six months ended December 31, 2022. The change was mainly a result of a pre-tax net gain of $215 million on the disposal of the Russian business in the six months ended December 31, 2022, and an increase in restructuring and related expenses, net, of $49 million, primarily related to the 2023 Restructuring Plan.

Consolidated Other Income/(Expenses), Net

Other income/(expenses), net changed by $54 million, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022, primarily from the adverse impact of the devaluation of the Argentine Peso.

Consolidated Interest Expense

Interest expense increased by $36 million, or 26%, for the six months ended December 31, 2023, compared to the six months ended December 31, 2022, driven primarily by increased variable interest rates.

Consolidated Income Tax Expense

The provision for income taxes for the six months ended December 31, 2023 and 2022 is based on our estimated annual effective tax rate for the respective fiscal years, and is applied on income before income taxes and equity in loss of affiliated companies and adjusted for specific items that are required to be recognized in the period in which they are incurred.

The effective tax rate for the six months ended December 31, 2023 increased by 7.1 percentage points compared to the six months ended December 31, 2022, primarily due to the difference in the magnitude of discrete events in both periods, mainly driven by tax benefits attributable to the disposal of the Russian business in the six months ended December 31, 2022.