Amcor  business planning 
Amcor has declared the 2005 financial year as one of change and challenge for the company at its annual general meeting on October 27. Earnings for the 2005 year were up one per cent to $443m before significant items, reflecting a sound performance considering that managing director Ken MacKenzie told the meeting that 2005 was one of the most difficult years ever experienced by the packaging industry.

“In many respects it was the perfect storm, with large cost increases on the supply side and slowing economic conditions on the demand side,” he said.

Raw material costs increased significantly and at their peak represented annualised increases of over $750m. MacKenzie said that although most of these increases were passed on to Amcor customers in a timely fashion, the company did not achieve full recovery in all cases and did experience some volume losses.

“It is unusual to have a peak in raw material costs coinciding with slowing economic conditions. The combination of the two meant there was a concerted effort by customers to reduce inventories, which further impacted on volumes in the second half.”

Also impacting earnings were the planned carton board mill upgrade in Queensland and the integration of the PET acquisition in Mexico, being behind schedule, and the ACCC investigation.

Shareholder fears that the ACCC investigation of the company’s Australian and New Zealand corrugated business could mean the end for Amcor were rejected by chairman Chris Roberts, who refused to answer any other questions regarding the alleged breach of competition laws.

As a result of Amcor’s own investigation into the matter, new management was installed in nearly all the senior positions of the corrugated box operations and there was a significant change in organisation structure to improve market focus and customer service.

“I wish to emphasise that the Board has taken vigorous action to protect the interests of the company and its shareholders in this matter,” said Richards.

Despite a turbulent year, MacKenzie had positive words for Amcor’s future, saying a portfolio review should be a key focus for the company, though it may take some time.

“There are good opportunities for sustained long term growth in the existing business base. There are good opportunities for cost reduction. The way forward requires a clear focus on doing the right things over the next two to three years,” he concluded.