Amcor plc (NYSE:AMCR) Q2 2023 Earnings Call Transcript

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Cameron McDonald: Just a question for me. Just on coming at it a different way with regards to the outlook on the volumes and the demand environment. Can you sort of delve into what the order cycle actually looks like with the — particularly the products around FMCG and the comments made by customers and how much visibility you’ve got on that order cycle? So obviously, your products get put into their production facility and then it sits on a shelf, and then they’ve got to sell it. So you get further visibility on what the customers are expecting. So have you got good visibility into the rest of the third quarter? Or can we see into the fourth quarter at this stage?

Ron Delia: The business is exposed really to consumer staples and fast-moving consumer goods and health care. And typically, we’ll have visibility a few months out. Obviously, we have a long — we have planning discussions with our customers over a longer period of time. But as you get near and near those discussions get more and more granular and you get more — a greater degree of accuracy as you get closer, so I would say our degree of forecast visibility extends a few months. And that’s about the extent of it. And right now, those forecasts are moving around quite a bit and have been now for the last few months. The volatility has increased and the variability in forecast has increased. I think on the positive side, to the extent that there is any destocking that’s gone on in our value chains, we would expect that to work itself through reasonably quickly. And in a matter of a quarter or two, we should be through whatever destocking needs to occur.

Operator: We’ll take our next question from Richard Johnson with Jefferies.

Richard Johnson: Ron, I just got a question on strategy. Your shareholder value accretion model has sort of been at the forefront of your strategy, very much the foundation of your strategy for a very long time now. I’m conscious of the fact though that TSRs really struggle to keep pace with the value-add in more recent years. And really, my question is around the sort of long-term numbers because you’re about to lose the big benefit of Alcan in your 10-year numbers. And I was just wondering how we should think about that, how you think about it and whether the model is still appropriate.

Ron Delia: Yes. Look, it’s a good question, Richard. We certainly believe the model is still appropriate. If you go back and look over a 10-year period post the Alcan acquisition, which is about 13 years ago now. The last 10 years, we’ve been well above from an intrinsic perspective, well above the 5% to the 10% to 15% sort of shareholder value creation model that we talk about. We still believe the business will generate low single-digit top line growth. It will convert that with operating leverage like we’ve seen in the first half. And then with the excess cash flows of the business, we’re going to continue to acquire or buy back shares and continue to grow our dividends. So all up, we think the model still makes sense. It’s held us in good stead, and we’ll continue to do so going forward.

Richard Johnson: Great. And just a quick one on Russia for Michael, if I may. Michael, it looks like you’ve booked, I think, off the top of my head, it’s about $15 million of costs related to Russia below the line in the quarter. Can I just check whether that’s correct? And secondly, what it might be? And thirdly, now you sold the business, there’s no more to come below the line.

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