Amcor to Sell Interest in BCNA Joint Venture for $122 Million

Rhea-AI Summary

Amcor (NYSE: AMCR) has agreed to sell its 50% stake in Bericap North America (BCNA) for $122 million. BCNA, a joint venture established in 1997, manufactures closures for beverage, food, and industrial markets across three facilities in the U.S., Canada, and Mexico. The joint venture reported FY2024 sales of $190 million and Adjusted EBIT of $19 million. The sale proceeds will be used to reduce debt and is expected to close by December 31, 2024. The transaction is not anticipated to impact Amcor's FY2025 financial outlook.

Positive

• Sale proceeds of $122 million to be used for debt reduction
• Transaction maintains FY2025 financial outlook stability

Negative

• Loss of revenue stream from BCNA's $190 million annual sales
• Reduction of $19 million in Adjusted EBIT contribution
• Loss of $8 million in Adjusted net income

Insights

Financial Analyst

The $122 million sale of Amcor's stake in BCNA represents a strategic divestment that will help strengthen the company's balance sheet. With BCNA generating $190 million in sales and $19 million in Adjusted EBIT, the exit multiple appears reasonable given the mature nature of the closures business.

The transaction's debt reduction focus is prudent given the current high interest rate environment. While the sale will remove approximately $8 million in adjusted net income, the interest expense savings should offset the earnings impact, keeping the FY25 outlook stable. This suggests management is prioritizing financial flexibility over maintaining non-core joint venture positions.

The cited disagreement over capital requirements indicates potential avoided future cash outlays, making this an opportune time to exit. The decision aligns with Amcor's disciplined capital allocation strategy while maintaining exposure to the closures segment through other operations.

Sale not expected to impact FY25 financial outlook
Proceeds to be used to reduce debt

ZURICH, Oct. 31, 2024 /PRNewswire/ -- Amcor (NYSE: AMCR, ASX: AMC), a global leader in developing and producing responsible packaging solutions, announced today it has entered into an agreement to sell its 50% interest in Bericap North America (BCNA) for $122 million. Established in 1997, BCNA is a 50/50 joint venture between Amcor Rigid Packaging and Germany-based Bericap that manufactures closures for beverage, food and industrial end markets in three facilities in the U.S., Canada and Mexico.

Fiscal 2024 total sales for the joint venture were approximately $190 million and Adjusted EBIT was approximately $19 million, both of which were fully consolidated under Amcor's Rigid Packaging business. Adjusted net income attributable to Amcor was approximately $8 million. Upon closing on or before December 31, 2024, cash proceeds will be used to reduce debt. Net of a resulting reduction in interest expense, the transaction is not expected to have an impact on Amcor's financial outlook for fiscal 2025. 

Amcor CEO Peter Konieczny commented, "We've had a long and respectful relationship with Bericap over the past 27 years. At this juncture, we have chosen to unwind the joint venture given differing views on near-term capital requirements and resulting returns. While Amcor continues to operate in the closures space as it remains a category of interest, we are committed to maintaining our disciplined approach to capital allocation. We thank the Bericap team for the many years of partnership and we wish them well for the future."

About Amcor

Amcor is a global leader in developing and producing responsible packaging solutions across a variety of materials for food, beverage, pharmaceutical, medical, home and personal-care, and other products. Amcor works with leading companies around the world to protect products, differentiate brands, and improve supply chains. The Company offers a range of innovative, differentiating flexible and rigid packaging, specialty cartons, closures and services. The company is focused on making packaging that is increasingly recyclable, reusable, lighter weight and made using an increasing amount of recycled content. In fiscal year 2024, 41,000 Amcor people generated $13.6 billion in annual sales from operations that span 212 locations in 40 countries. NYSE: AMCR; ASX: AMC 
www.amcor.com I LinkedIn I YouTube

Cautionary Statement Regarding Forward-Looking Statements

This document contains forward-looking statements regarding Amcor. Such statements are based on the current expectations of the management of Amcor and are qualified by the inherent risks and uncertainties surrounding future expectations generally. Actual results could differ materially from those currently anticipated due to a number of risks and uncertainties. Neither Amcor nor any of its respective directors, executive officers, or advisors, provide any representation, assurance, or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually occur. Risks and uncertainties that could cause actual results to differ from expectations include, but are not limited to: changes in consumer demand patterns and customer requirements in numerous industries; the loss of or reduction of demand from key customers; significant competition in the industries and regions in which we operate; an inability to expand our current business effectively through either organic growth, including product innovation, investments, or acquisitions; challenging global economic conditions; impacts of operating internationally; price fluctuations or shortages in the availability of raw materials, energy, and other inputs which could adversely affect our business; production, supply, and other commercial risks, including counterparty credit risks, which may be exacerbated in times of economic volatility; pandemics, epidemics, or other disease outbreaks;; a significant increase in our indebtedness or a downgrade in our credit rating could reduce our operating flexibility and increase our borrowing costs and negatively affect our financial condition and results of operations; rising interest rates that increase our borrowing costs on our variable rate indebtedness and could have other negative impacts; foreign exchange rate risk; a significant write-down of goodwill and/or other intangible assets; a failure to maintain an effective system of internal control over financial reporting; an inability of our insurance policies, including our use of a captive insurance company, to provide adequate protection against all of the risks we face;; and other risks and uncertainties are supplemented by those identified from time to time in our filings with the Securities and Exchange Commission (the "SEC"), including without limitation, those described under Part I, "Item 1A - Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 and as updated by our quarterly reports on Form 10-Q. You can obtain copies of Amcor's filings with the SEC for free at the SEC's website (www.sec.gov). Forward-looking statements included herein are made only as of the date hereof and Amcor does not undertake any obligation to update any forward-looking statements, or any other information in this communication, as a result of new information, future developments or otherwise, or to correct any inaccuracies or omissions in them which become apparent, except as expressly required by law. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement.

Presentation of non-GAAP information

Included in this release are measures of financial performance that are not calculated in accordance with U.S. GAAP. These measures include adjusted EBIT (calculated as earnings before interest and tax) and adjusted net income.  In arriving at these non-GAAP measures, we exclude items that either have a non-recurring impact on the income statement or which, in the judgment of our management, are items that, either as a result of their nature or size, could, were they not singled out, potentially cause investors to extrapolate future performance from an improper base. Amcor also evaluates performance on a comparable constant currency basis, which measures financial results assuming constant foreign currency exchange rates used for translation based on the average rates in effect for the comparable prior year period. In order to compute comparable constant currency results, we multiply or divide, as appropriate, current-year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior-year average foreign exchange rates. We then adjust for other items affecting comparability. While not all inclusive, examples of items affecting comparability include the difference between sales or earnings in the current period and the prior period related to disposed, or ceased operations. Comparable constant currency net sales performance also excludes the impact from passing through movements in raw material costs.  Management has used and uses these measures internally for planning, forecasting and evaluating the performance of the Company's reporting segments and certain of the measures are used as a component of Amcor's Board of Directors' measurement of Amcor's performance for incentive compensation purposes. Amcor believes that these non-GAAP measures are useful to enable investors to perform comparisons of current and historical performance of the Company. These non-GAAP financial measures should not be construed as an alternative to results determined in accordance with U.S. GAAP. The Company provides guidance on a non-GAAP basis as we are unable to predict with reasonable certainty the ultimate outcome and timing of certain significant forward-looking items without unreasonable effort.  These items include but are not limited to the impact of foreign exchange translation, restructuring program costs, asset impairments, possible gains and losses on the sale of assets, and certain tax related events. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP earnings and cash flow measures for the guidance period.

View original content:https://www.prnewswire.com/news-releases/amcor-to-sell-interest-in-bcna-joint-venture-for-122-million-302293011.html

SOURCE Amcor

FAQ

How much is Amcor (AMCR) selling its BCNA stake for?

Amcor is selling its 50% stake in Bericap North America (BCNA) for $122 million.

What were BCNA's financial metrics for fiscal 2024?

BCNA reported total sales of $190 million and Adjusted EBIT of $19 million in fiscal 2024.

When will Amcor's BCNA sale transaction close?

The transaction is expected to close on or before December 31, 2024.

How will Amcor use the proceeds from the BCNA sale?

Amcor will use the cash proceeds from the sale to reduce debt.