Amcor Plc (AMCR) — Q3 2025 Earnings Call Transcript

Thank you, Operator. And thank you everyone for joining Amcor’s fiscal 2025 third quarter earnings call. Joining the call today is Peter Konieczny, Interim Chief Executive Officer; and Michael Casamento, Chief Financial Officer. Before I hand over, let me note a few items. On our website, amcor.com, under the Investor section, you’ll find today’s press release and presentation, which we’ll discuss on the call. Please be aware that we’ll also discuss non-GAAP financial measures and related reconciliations can be found in that press release and the presentation. Remarks will also include forward-looking statements that are based on management’s current views and assumptions. The second slide in today’s presentation lists several factors that could cause future results to be different than current estimates. Reference can be made to Amcor’s SEC filings, including our statements on Form 10-K and 10-Q, for further details. Please note that during the question-and-answer session, we request that you limit yourself to a single question and then rejoin the queue if you have any additional questions or follow-ups. With that, over to you, PK.

Thank you, Tracey, and thank you to all who have joined us for today’s call. Today is a defining day for Amcor, as we successfully closed our transformational combination with Berry Global earlier than we anticipated and in record time. Early close means that we are now positioned to accelerate earnings growth through the delivery of significant synergies that are identified and within our control. I want to thank the Amcor and Berry teams for their hard work and dedication over the past months. Together, they have navigated challenges and complexity to accomplish a truly remarkable outcome that positions Amcor for a faster start on synergy delivery and growth. As always, on Slide 3, we begin with safety, our number one priority. This commitment remains unchanged as we welcome 30,000 new colleagues to Amcor. Our total recordable incident rate, TRIR, fiscal year-to-date was 0.27, and 69% of our sites have remained injury-free for over a year. Our focus on workforce safety and the well-being of our people is resolute, and we continue to achieve industry-leading performance. Our key messages for today are on Slide 4. First, we continue to deliver EPS growth in Q3, reflecting disciplined execution and resilience in a demand environment that became more variable and uncertain as the quarter progressed, particularly for our North American business. Second, as I mentioned, the Berry combination closed ahead of schedule. It took less than six months from announcement to close, during which time we secured shareholders approvals, completed the necessary refinancing, including a multi-billion-dollar debt offering and obtained unconditional approval from regulators in all required jurisdictions. As a result, our earnings and cash flow guidance has also been updated to reflect expectations for the combined company in the fourth quarter. And third, our early close also means we will enter fiscal 2026 in an even better position. With confidence, the synergies run rate will start strong and build quickly through the year. The source of synergies has been identified. Our execution plans are clearly set out and within our control, and synergies alone give us clear visibility to significant total earnings decrease of approximately 12%. Turning to Slide 5. As we begin integration, our focus is clear. Deliver identified synergies and grow faster. Experience with previous acquisition tells us that having clear accountability and alignment from day one is critical to our success. This combination brought together two extraordinary pools of talent, and we are fortunate to have a team of leaders in place with significant functional, operational, and industry expertise. Our business is organized around two segments. Amcor’s Global Flexible business is being led by Fred Stephan, who has many years of experience within Amcor leading large-scale Flexible Packaging businesses. And Jean-Marc Galvez, former President of Berry’s Consumer Packaging International division, is leading Amcor’s Global Containers and Closures business. Fred and Jean-Marc are well supported by world-class functional leaders and dedicated integration teams, with separate work streams focusing on capturing cost, financial, and growth synergies. Slide 6 provides a recap of the highly compelling rationale for this combination and the alignment with our strategy to become the packaging partner of choice for customers while also delivering stronger, more consistent and sustainable organic growth and further improving margins. There are a number of growth unlocks now available. The combined company is a better business with a complementary and broader portfolio of primary packaging solutions at scale across consumer goods and healthcare end markets. In the context of a stronger, larger-scale company, we are now uniquely positioned to further refine our portfolio mix, to focus even more on attractive, higher-value, faster-growing end markets. With further pruning, we will increase average growth rates, margins, and cash generation across the remaining portfolio, and we continue to advance our work on this review. In addition, Amcor has exceptional and now enhanced capabilities in material science and innovation, providing opportunities to drive growth by effectively and efficiently leveraging our combined resources. With more than 1,500 R&D professionals and annual R&D investment of approximately $180 million, we can now optimize and redirect R&D spend, providing capacity to focus on solving the most complex functionality and sustainability challenges faced by our customers and consumers. Executing against these growth opportunities and delivering the significant identified synergies is largely within our control and will drive compelling near- and long-term value for shareholders. Turning to synergies on Slide 7. The work our integration teams have already completed gives us confidence in delivering $650 million of synergies, which will result in significant earnings growth over the next three years. Approximately 40% of total synergies or $260 million is expected to benefit fiscal 2026 earnings, a further $260 million of synergies will benefit earnings in fiscal 2027, with the balance in fiscal 2028, leading to total EPS accretion in excess of 35% over the three-year period. In addition, we expect one-time cash benefits of $280 million from working capital improvement, which will fund costs to achieve. Finally, on Slide 8, and the compelling sustainable financial value we’re creating. Including synergies, annual cash flow available to reinvest will exceed $3 billion each year by fiscal 2028 and will enable us to maintain a strong investment-grade balance sheet, deploy additional cash to support higher levels of organic volume-driven growth, finance further M&A, and continue funding a compelling and growing dividend from Amcor’s current annualized base of $0.51 per share. With stronger cash generation and greater opportunities to invest, we also expect to increase long-term EPS growth and raise the outcomes under our shareholder value creation model to a new and higher level. Simply put, this combination is a game changer for Amcor’s financial profile and provides self-help earnings growth opportunities at a time of increasing uncertainty in the macro environment. Moving to Slide 9, for a summary of our third quarter financial results. Overall volumes were in line with last year, with modest share gains offset by weaker consumer and customer demand. As Michael will cover in more detail, there were a number of puts and takes across our regions. Volume growth in the low-to-mid single-digit range, in each of Europe, Asia-Pacific, and Latin America, was offset by weaker than anticipated consumer demand in our North American businesses, including North American beverage. Notwithstanding the increasingly dynamic consumer environment, Q3 saw continued growth across key financial metrics, with net sales of $3.3 billion and EBIT of $384 million, both marginally higher than last year. We also delivered another quarter of adjusted EPS growth, up 5% on a comparable basis, benefiting from a continued focus on cost as well as improving healthcare volumes, which benefited price-mixed trends as anticipated. I’ll now turn the call over to Michael to cover the third quarter results and our updated outlook in more detail.

Thanks, PK, and hello everyone. Beginning with the Flexible segment on Slide 10, volumes for the quarter were up 1% on last year. Modest share gains in several important categories, including healthcare and protein, were partly offset by weaker consumer demand, primarily in North America. Overall demand remained solid through the quarter in Europe, Asia, and Latin America, with each region achieving low-to-mid single-digit volume growth. China and India continued to deliver mid-to-high single-digit growth and volumes were up across most countries in Latin America. As PK mentioned earlier, the demand environment in North America became more variable and uncertain as the quarter progressed. North American volumes were down low single digits, which was lower than we anticipated heading into the third quarter, including in snacks and confectionery and home and personal care categories. From an end-market perspective, we continue to see good growth in a number of our priority markets. Pet care, premium coffee and ready meals continue to grow strongly. And volumes in meat, dairy, and liquids were uploaded mid-single-digit, benefiting in part from modest share gains. Healthcare volumes continued to improve sequentially. Medical volumes were up in the high single digits, and as expected, demand for pharmaceutical packaging improved significantly, as destocking is now essentially behind us. Strength in these categories more than offset volume declines in end markets, such as snacks and confectionery and home and personal care, which were both down low single digits. Improved healthcare volumes supported a return to favorable price mix, and overall, net sales were up 1% on a comparable constant currency basis. Adjusted EBIT of $358 million grew 2% on a comparable constant currency basis, benefiting from the higher volumes and continued strong cost performance. An EBIT margin for the quarter remained strong at 13.7%, broadly in line with last year. Turning to Rigid Packaging on Slide 11, the Rigid business had a more challenging quarter, as solar growth in Latin America and specialty containers was more than offset by weaker than anticipated consumer and customer demand in North American Beverages. Net sales were approximately 3% lower than last year, reflecting a 2% decline in overall volumes and an unfavorable impact from price mix of approximately 1%. Entering the quarter, we anticipated continued soft demand in North American Beverage. However, consumer and customer demand across our key categories weakened further, resulting in a high single-digit volume decline. Latin American volumes were up mid-single-digit, and growth was strong in several countries and regions, including Mexico and Central America. And volumes were higher in the specialty containers business with growth in healthcare end markets. From an earnings perspective, adjusted EBIT of $55 million for the quarter no longer includes any contribution from the Bericap Joint Venture, which was divested in December 2024. Bericap benefited Rigid Packaging segment earnings by approximately $5 million in the third quarter last year. Now, on a comparable basis, EBIT was unfavorably impacted by lower volumes and price mix headwinds. This was partly offset by favorable cost performance net of sequentially higher labor costs in the North American Beverage business. And it’s typical for manning capacity to increase in the March quarter as the business approaches the seasonally strongest June quarter. And this had an unfavorable impact on earnings for the quarter, given the lower anticipated volumes. Moving to cash flow and the balance sheet, on Slide 12, on a year-to-date basis, the business had a net cash outflow of $17 million, which is lower than we expected and compares with the cash inflow of $115 million last year. The key driver of this underperformance is higher inventories as a result of weaker sales volumes in the March quarter. In response, we have significantly increased our team’s focus on working capital performance, and we are prioritizing inventory reductions to a level that is more aligned with the expected demand. Leverage of 3.5 times was higher than we were anticipating due to stronger euro spot rates towards the end of the quarter, which negatively impacted leverage by 0.1 times, as well as higher quarter-end net debt. We expect to exit fiscal 2025 with leverage at approximately 3.4 times inclusive of acquisition impacts, and we remain confident in bringing leverage down to approximately 3 times by the end of fiscal 2026. This trajectory is aligned with expectations we set out when the merger was announced in November last year. Our teams did an excellent job completing the required refinancing of Berry Global debt prior to transactions closed and ahead of this current period of increased volatility in the financial markets. Finally, the company has returned $550 million in cash to shareholders through a growing dividend, and the Board of Directors today declared the March quarter dividend at $12.75 per share, which is 2% higher than the same quarter last year. This brings me to the outlook on Slide 13. As we look ahead into the fourth quarter, we are not anticipating any improvement in the overall demand environment, and we believe this is a particularly prudent approach given current macroeconomic conditions and uncertainty around tariff impacts on consumers and customers. As a result, we expect overall Q4 volume growth to remain muted and aligned with the March quarter. That said, with the successful early close of the merger, we have taken into account two months of Berry ownership, and we continue to expect earnings for fiscal 2025 within our original guidance range. Heading into the final quarter of the year, we are narrowing our outlook range for adjusted EPS to $0.72 per share to $0.74 per share on a recorded basis. This takes into account two months of earnings from the legacy Berry business, as well as additional shares issued upon close, which results in a net accretion of up to $0.01 per share. In terms of free cash flow, we expect a range of $900 million to $1 billion for the year, which also includes a contribution from the legacy Berry business. Importantly, as PK mentioned earlier, before we even consider assumptions around organic performance for fiscal 2026, we have clear visibility to significant EPS growth of approximately 12% through delivery of $260 million of synergies alone, which is not dependent on improving macroeconomic, customer, or consumer demand. We’re excited about the opportunities ahead and confident in our ability to execute on the controllables and deliver significant value to shareholders in FY 2026 and beyond. So, with that, I’ll hand back to you, PK.

Thanks, Michael. To sum up before taking questions, with an enhanced global footprint, expanded capabilities across consumer and healthcare packaging, and a clear roadmap to significant synergies over the next three years, Amcor is well-positioned to deliver value to our stakeholders despite an increasingly uncertain external environment. We are thrilled to welcome our new colleagues, customers, and shareholders. This is day one of an even stronger future for Amcor and the best is yet to come. Operator, we’re now ready to take questions.

Thank you, Operator. Good day, everybody. Congrats on the merger close, first off. I guess on the progressive deceleration in North American volumes that you called out, maybe you can just share with us what customers are sharing with you as it relates to the sequential weakening. And the reason I ask is, volumes were already at a low point to begin with, given previous destocking, consumer affordability issues, and all that stuff. So what got worse, do you think, and related to that, was Berry’s volume profile any different than what you reported? Thank you.

Yeah. Thanks, Ghansham. Really good questions. And let me start with what we’re seeing in North America. First off, just to position that and put it into perspective, we went into the quarter with an expectation of low-to-mid single-digit volume growth across the Board. And we came out of the quarter seeing that we pretty much hit that expectation everywhere, except in North America. So that was the holdback. In North America, we have seen real weakness on the consumer demand, particularly hitting our North American Beverage business, which was down high single digits and therefore softer than what we had seen in the prior quarter, where it was down about mid-single digits. And we’ve also seen some weakness in our North American Flexibles business, which was driven by categories that can be more discretionary. For example, beverage and confectionery. On confectionery, also keep in mind that we’re seeing a lot of inflation coming from the cocoa environment. While that was offset with some categories where we’ve seen growth in healthcare, meat, dairy, and liquids, that was essentially the overall story for North America, weaker than what we expected. Just want to make one more comment. As you pointed that out, volumes have been low, and in the past quarters, certainly driven by destocking, which, however, reduced over time. The restocking is now behind us. What we’re seeing now is no longer an impact from destocking. What we’re seeing now is really soft consumer demand, which I’d say really goes back to sticky inflation. We called that out in earlier calls. And then in the third quarter, or the first quarter of this calendar year, certainly the whole uncertainty around the tariff situation has had an impact.

Good afternoon. You pointed to the 20% synergy-driven EPS growth assumption for fiscal 2026, and I think you talked about that taking into account any organic performance in the underlying business. I guess a couple of questions there. Is there an underlying assumption that organic growth is going to be positive in fiscal 2026 or are you not really making any assumptions at all? And maybe to ask the question another way, if we are in a much more challenging macro environment in fiscal 2026, can you talk about your ability or your confidence in achieving the synergies in a tougher macro environment?

Okay, Anthony, I'll start here, and then I’m sure Michael will add. Before addressing your question, let me finish responding to Ghansham's question about Berry's volume performance. It's a bit early for me to have all the details regarding last quarter's volume performance since we just closed the acquisition, but at a higher level, we’re excited about the improved growth on the Berry side. The answer likely lies in the mix regarding customer and category exposure. Remember, North American Beverage is not a category Berry participates in. So, it's about the mix, and I wanted to ensure that was covered. Now, regarding your question about volume guidance for 2026 and what we’re assuming for 2024 amidst the macroeconomic environment, let me start there. In our prepared comments, we mentioned that we’re currently guiding towards the end of this fiscal year, including Q4. We generally wouldn’t make drastically different assumptions about the macro environment in a short period. Thus, from Q3 to Q4, we typically roll forward the macroeconomic conditions we operate in. We’ve observed flat volume growth overall on the Amcor side and slight growth on the Berry side. We'll see two months of contribution from Berry in the fourth quarter, which leads us to expect volume performance to remain flat or slightly up for that period. Now, as for 2026, we won’t be providing guidance today, which we usually do in August. However, we're optimistic about the benefits from the Berry combination, and since we closed the acquisition quickly, we can explore synergy opportunities two months earlier than anticipated. This positions us favorably to kick off 2026 effectively. We're confident in our ability to realize synergies in the first year, amounting to $260 million, which translates to a 12% EPS uplift. I'll pause here and see if Michael has anything to add.

No. I think you covered it, PK. We feel really confident around the ability to deliver those synergies, and it’s not contingent on the macroeconomic environment or the consumer or customer demand. And in fact, for Amcor, we see that as a real advantage because we’ve got self-help in the form of those synergies. So out of the gates, as PK mentioned, we’ve closed earlier that we’ve got a good line of sight. The teams have been working on this synergy delivery by function. So we’ve got four functional teams set up across SG&A, procurement, operations, and growth, dedicated teams working on that. And we’re going to hit the ground running and so from July 1, we’re really confident around the ability to deliver this.

Good morning, PK. Good morning, Mike. Just an extension on the synergies commentary. So $260 million in FY 2026, just wondering if you can categories the breakdown of that, particularly with regards to procurement. I’m just interested in how the preliminary discussions have gone with key raw material suppliers. Any color you can shed on that would be much appreciated? Thank you.

Yeah. I’ll start on that one, Daniel. Look, I mean, the $260 million synergies, we broke out, as we said, we’ve broken out the $650 million over three years, a portion from procurement, SG&A, operations, and growth. In 2026, I mean, clearly out of the gates, your focus and ability to deliver is, first and foremost, comes from the G&A side. So that’s typically the first piece you get onto. Procurement will deliver as well and that will build through the first 12 months and into the second year. And then, the operations side typically takes a little longer because that’s footprint optimization. That said, we’ve already identified some areas where we’ve got overlap. So, again, teams have been working on that and we’ll hit the ground running, but they tend to take a little bit more just because you’ve got to move network around, et cetera. And then look on the growth synergies. Again, that’s something that typically takes a little longer, but again, a dedicated team on that. So we haven’t called out exactly, you know, the mix of the synergy, Daniel, but that kind of gives you a flavor that, SG&A typically comes first, procurement comes through and will build, and then you get into the operations and the growth.

Yeah. And if I add to that, Daniel, I mean, we didn’t provide and we’re not intending to provide a detailed breakdown of the $260 million in the first year, but Michael gave you some quality here. It’s no question that procurement will be a major contributor. You asked how things are going so far in the conversations. Look, we may have had some touch points with suppliers, but the level of engagement around that question has been really on a high level. And that is understandable because we hadn’t even closed the acquisition yet. And the suppliers are not really interested to engage in that conversation unless there’s something real on the table. So we’ll go into that, I think a lot more from here on. That said, the teams have been doing all the work that you would expect them to do. We have clean teams set up that actually have been looking at details and all the work has really resulted in a point where we say we’re pretty confident with the ability to deliver.

Hey. Good afternoon. Good morning, everyone. Thanks for the time and congratulations on the completion of the merger.

Thanks, Matt.

PK, maybe on the portfolio premium that you did discuss, given that there’s weakness in industrial end markets or just broader uncertainty and demand in general in the M&A environment, how has your idea of timing around that pruning changed from when the merger was announced to now or when can we expect an incremental color on that portfolio review? Thanks for taking the question.

No, thanks, Matt. I have been very clear in previous calls that we see an opportunity for more dynamic portfolio management, especially now that we have merged with Berry. I have noted that we have started that analysis, where we are evaluating all of our activities against specific criteria, and we have made significant progress. First, we need to assess that evaluation in the context of our new combined entity. There is a substantial synergy opportunity that we intend to realize, and we have greater capabilities. We can learn from each other’s best practices, which may influence our evaluation of the various businesses and their competitiveness in their respective markets. Secondly, you mentioned the current operating environment. While the environment may present challenges, it will not hinder our initiative. We will proceed with the assessment. If your question pertains to the timing of execution, that is difficult to determine at this moment as conditions are evolving daily. However, I can assure you that we will remain disciplined in our actions moving forward.

Sorry, excuse me, guys. Hi, Peter. Hi, Michael. I was just going to focus on the procurement synergies, if I could, please. They’re 60% of the overall cost synergies that you guys are targeting. Michael and Peter, if I understood correctly, you were saying that that relied on a combined entity to have those discussions with the suppliers. So I guess if you could step us through for 2026, is the priority a harmonization of those supplier terms? And then as we turn our minds to 2027 and 2028 to hit those EPS accretion targets, is it more about drilling down into the terms of that procurement and potentially looking for some pricing benefits, given your new scale, please?

Yeah. Jakob, I’ll have a go at this. I mean, the way it works, having been through these acquisitions of large scales a couple of times with Amcor, there’s a very general principle, which is get to the synergies fast or never. So I’m not sure that you pace yourself in the conversations with suppliers when you particularly look at procurement. You need to wait until you can represent the combined spend. That’s what I meant in my earlier answer. As long as the acquisition is not closed, you don’t really have a leg to stand on when you enter into the conversation. Now that that’s the case, we can enter into the conversations and have the discussions with our suppliers and that is what’s going to happen. And as we start those discussions, you know, it will be across everything. It will be across price. It will be across terms. It will be across a number of different things. And then we’ll try to make progress as quickly as possible against that. I think that’s the way I would want to answer that question.

And I think if I just add there, PK, to put it in perspective, if you remember, again, the total addressable spend for the combined entity is around $13 billion, of which $10 billion is raw materials. So when you put that into perspective, it’s kind of a 2.5% to 3% impact that we’re expecting from the procurement area for the synergy. So, that’s 1% a year. It’s something that’s absolutely achievable from where we sit.

Hi, everyone. Good morning. Good afternoon. Thanks for the details. How are you? So my question is going to focus on growth, kind of tying together a lot of what’s already been sort of talked about. So can you, PK, tell us what in particular in the consumer environment, and certainly, there’s been the volatility with tariffs and so on, but how has that affected your customers’ outlook on demand when in reality they’re producing staples, confectionery items, protein, coffee? How is all the volatility in things that are much more discretionary kind of filtering back into what your customers are thinking about in terms of their outlook for growth? And you need to be, I’m sure, thinking about that because the growth or lack of it is an important variable in terms of your valuation over time. Relatedly to that, what your customers are saying, with the growth outlook decelerating, I recognize you’re only a few days into owning Berry, what would you say the probabilities are and what levers will you use to perhaps see whether those synergy targets are at least achievable, if not conservative at this juncture? You already mentioned that as a percentage of the overall spend, the procurement spend, the revenue of the company, which is over $20 billion, these are relatively small percentages. So how should we think about how you’ll be able to leverage, perhaps grow, that synergy target, especially with volume growth being relatively flaccid at the moment? Thank you and good luck in the quarter.

Thanks, George. That was a comprehensive question. I'll break it down into two parts and invite Michael to share his thoughts as well. The first part concerns how our customers are faring in the current environment and how uncertainty affects their growth performance, which is crucial for us since customer demand drives our sales. We aim to maintain close relationships with our customers to understand their needs. Looking back, the uncertainty we observed particularly in North America last quarter has led to a decline in consumer demand. This is a significant factor. When we analyze consumer behavior, we notice that they are seeking value and being more cautious about their spending. Generally, consumers tend to buy less when they have the option, and for essential items, they change their purchasing habits. They may trade down, buy in bulk, or switch channels, which aligns with what our customers are experiencing. Everyone is facing uncertainty in forecasting demand, leading to considerable volatility, which complicates matters. Sometimes, we receive volume forecasts from our customers that do not materialize, and we must navigate that as part of our value chain, just like everyone else. That's the first part. Let me pause and see if Michael wants to add anything. No? Okay. Moving to the second part, which focuses on how we approach synergies and synergy outperformance in this environment. We have been clear about the synergies we expect, which is $650 million over three years. We’ve discussed how we plan to achieve this and are currently working on executing those plans. We have solid pipelines for each category of those synergies. In some instances, our pipelines indicate more opportunities than we initially anticipated, but they need to adapt to the current environment. Therefore, I am not looking to raise our expectations beyond what we have previously announced. I also won’t commit to a specific breakdown for those synergies. Overall, we are confident that we can achieve our goals. Lastly, it's essential to remember that the situation is volatile. We have created conditions in North America in a short time due to uncertainty around tariffs, and this situation remains unpredictable. We may find ourselves reassessing our perspective in a few quarters, which could alter our view of the operating environment. However, this does not change our expectations for the synergies. I apologize for the lengthy response, George, but I hope I addressed your underlying question.

Yeah. Thanks for taking my question. Just one on the North America beverage business. You’ve called that high single-digit decline in volume, I think it was, in the quarter on a year-over-year basis. And I guess just looking through that, it seems to look like even for North America Beverage will be down sort of 20% or so year-over-year. So could you maybe just provide a comment if that’s a sensible assumption? And given that, is there any sort of structural issues going on in that business that need to be discussed at this point? Thanks.

Let me start by addressing your question directly. First, I want to frame the volume performance we've observed, which has declined in the high single digits. It's important to note that this aligns closely with market trends. My point is that this is not a matter of losing market share. When we analyze SCADA data in North America and examine the relevant categories we are involved in, along with our customer exposure, you can understand the volume performance we've experienced this quarter. Secondly, I'll let Michael provide insights on how this affects our bottom line. You also inquired about any structural issues within that business. We have owned this business for a long time and have experienced several cycles. While this is a prolonged and extended cycle, various factors are influencing the situation around us. At this moment, we cannot declare it a structural issue, and it wouldn't take much of an improvement in volumes to enhance the overall business performance. Michael, please feel free to add to the discussion.

To follow up on that, regarding the EBIT performance, we must consider that last year's EBIT included the Bericap business, which we sold in December 2024. That contributed about $5 million to EBIT last year, which is not included in the current year. Additionally, the overall performance for Rigid declined by about 12% on a comparable constant currency basis, primarily due to a decrease in volume, especially in North American Beverage. We also increased labor in the business during the third quarter, a typical move to prepare for the busy June quarter to manage higher demand. However, with the lower than expected volume performance this quarter, that increased labor cost affected the overall cost structure and the bottom line for the quarter. This is the main reason for the 12% year-on-year decline. We do anticipate some improvement as we move into Q4.

Oh! Good day, Peter and Michael. Hope you’re well.

Hi, John.

Just a comment on or a question around sort of volumes within the quarter. Perhaps what you saw within the quarter and any comment you can make on April, which sort of goes to a broader question about your expectations for Q4 and some of the moving parts within that.

I mentioned this earlier, but let me reiterate. The new information is that we've observed a decline in consumer demand throughout the quarter. I believe that's a fair assessment. I'm generally not in favor of discussing our volume performance on a month-by-month basis, as I don't find it particularly helpful. However, in this instance, it is worth noting the weakening demand experienced during the quarter. It’s important to highlight that our portfolio differs significantly across regions, with solid expectations of low-to-mid single-digit demand elsewhere. In North America, though, we have seen a decrease. As I previously stated, our outlook for the fourth quarter closely mirrors what we experienced in the third quarter, particularly with Amcor's volumes remaining relatively flat. On the other hand, Berry has shown some growth in the third quarter, which was encouraging. We will see two months of Berry’s contributions in the fourth quarter, and assuming the same trend continues, we can expect the fourth quarter to be flat to slightly growing.

Yeah. Thank you, PK, Michael, Tracey, you’ve been taking my questions. And congrats on closing the deal and on all the progress.

Thanks, Mike.

Just I wanted to focus on synergies, not to be a dead horse here, but I wanted to just follow up with you regarding the procurement savings of $325 million. Now, both you and Berry are some of the largest purchasers globally of resins. I don’t believe there’s a direct overlap, maybe in some of the grades. I think you guys may be more heavier to PET, Berry may be heavier to polypropylene. There is some overlap on polyethylene. But so there’s, you’ll have direct overlap in some things. In addition, the resin producers themselves are under pressure. And I think they’d be somewhat reluctant to offer notable price concessions given the financial difficulties they’re encountering. So we just want to get your thoughts about how you intend to approach the procurement savings, particularly in a more challenging environment on resin. And then secondly, can you remind us about the vetting process you undertook regarding the cost synergies? How did you determine that these figures were the correct figures in terms of synergies themselves? Thank you.

I’ll start, and then Michael can add to it. I want to revisit a couple of data points from our previous calls. Michael mentioned that the combined spending of the companies totals $13 billion, with $10 billion attributed to raw materials. If you consider that alongside the anticipated synergies, we’re looking at around 3% expected over a three-year period, which needs to be added to our typical yearly output. This isn't an overly ambitious expectation for procurement synergy. As we’ve stated consistently, it's important to keep this in mind. You also pointed out that the overlap is limited, especially on the resin side, which is encouraging. For instance, Berry is significantly stronger in polypropylene, whereas Amcor excels in PET and PE. This dynamic creates a chance for us to align our terms with a larger buyer. That has always been one of our strategic advantages, and based on our extensive efforts, we feel confident that this is a viable opportunity. Regarding generating those synergies in a challenging environment, I believe that in a volume-muted situation, being a major buyer makes us appealing to suppliers since we can contribute critical volumes to help maximize existing capacities. Lastly, it's worth noting that we have various alternatives and are not dependent on just a few suppliers. We intend to utilize these alternatives effectively.

And Mike, if I just pick up on your second question, the second part of the question, which is around just a reminder of how we came about a synergy number and shored that up. I mean, we put a lot of work in behind the scenes on this on both sides, actually on the Berry and Amcor side. Obviously, we’ve both got a lot of experience in M&A. We used external consultants to help us benchmark what you should expect, the deal of this size and the various components relating to that. We’ve had the integration teams in place. So we stress tested that along the way. And I mean, typically you would see synergy delivery in these types of deals, somewhere around the 5% of sales would be the cost synergies. And that’s where we’ve ended up around. If you just take the cost synergies line of $530 million, you then got $60 million in growth and $60 million in financials. So we triangulated that from all different ways and broke it out by the various components. We felt really confident around the ability to deliver that number.

Hi PK, hi Michael. Regarding the procurement synergies, I understand that a 3% saving for Amcor over three years might not seem significant, but for some suppliers with EBIT margins around 10% to 15%, that represents a substantial reduction in their margins. I'm curious about how much you can increase procurement synergies and the possibility of switching to alternative suppliers if necessary. I want to reference a communication sent to your suppliers on April 16, where they were invited to meet in Chicago. It appears to be more of a directive than a collaborative approach moving forward. How many suppliers responded to that communication, and what turnout do you anticipate at the meeting? Additionally, what might be the implications for suppliers if they don't cooperate? Lastly, considering the scale of the combined businesses, how much of your raw materials can you source from alternative suppliers? I recognize that you've managed many large acquisitions, but this one is particularly significant. Thank you.

No, Keith, you’ve mentioned all the right points. This acquisition is particularly significant, and I have experience with several major acquisitions. Therefore, I can't delve deeper into that discussion. We have a strategy in place, and some of these discussions with suppliers are highly confidential. We intend to address this matter with great respect. We also have a business interest to consider, which will guide our actions. I appreciate your question, but I would ask for your understanding that this level of detail isn’t something I can discuss on this call.

Thanks for taking my question. Look, we’ve been hearing a little bit more about the North American consumers sort of value seeking behaviors right now. So can you please talk to how your merged Flexible portfolio is positioned to respond to that shift in consumer behavior, just particularly in terms of any shift to private label, smaller portion sizes or anything else we should be thinking out on that shift in behavior, please?

Yeah. Nathan, this is a good one. We see a couple of things that we can respond to. And the one that I want to carve out here is when you think about value seeking behavior and the direction of going potentially to non-branded product alternatives, that is something, like on the private label side, that’s certainly something that you could expect the consumers to do. We have a good participation in that category. In North America, we’re pretty much proportionally represented. And the reality is that the packaging formats that we’re actually selling, whether it’s branded or private label are very similar. They end up being very similar. So one of the things that we take away from that is, expanding our participation in those areas where consumers will turn to. And that is certainly something that we do. Again, North America, that is pretty well established. In other regions, we may have some opportunities here and there, and we would be driving that.

Thanks, guys. I appreciate you asking the question. Just on North American Beverage, just wondering, is there any numbers you can give us around the net exposure of North American Beverage in the combined business? And going forward, when you think about pruning, is that just Berry businesses you’re looking at or is there some Amcor segments there as well? Thanks.

So if I go backwards, we’re definitely looking at pruning of the portfolio in the context of the combined company. So that’s a new Amcor going forward. It has nothing to do with carving out either legacy Berry or legacy Amcor. So that’s a clear answer on the second question. On the first one, I’m not sure I fully understood the question, but I just want to make very clear, the Containers and Closures business from Berry has no participation in the North American Beverage category. That’s an Amcor question. Let me just see with Michael here if he heard the question differently.

Yeah. No. That’s right. I think the exposure on the beverage side for us is really the legacy Amcor business has $1.5 billion kind of revenue into the beverage space and Berry really is nothing. So that’s the exposure.

Good morning. Just wanted to touch on the below the line costs. So with the early integration of Berry, it looks like you’ve taken $26 million already below the line. What’s the expectation for that relative into the fourth quarter? And can we confirm then that that’s including that that is part of the $280 million. So that in FY 2026 and beyond that, whatever’s incurred in this quarter and the next quarter is a reduction to that $280 million in the following years.

I’ll just put some clarity on that. There’s a couple of things going on in that line. So firstly, there’s transaction costs and for a deal of this size, you’d expect the transaction cost kind of 1.5%, 2% of the enterprise value. So I’d call it $250 million to $300 million, part of which would end up in the Berry perimeter and the balance in Amcor. So what we’ve seen to-date below the line, I think there’s about $36 million in that year-to-date of which the $28 million, $30 million is actual transaction costs. So that’s things like legal fees, consultant fees, financing charges. So we’ve got more of that to come through, and that’ll come through in the next couple of quarters. And then in addition to that, over the three-year period, we’re going to have around $280 million of cash costs relating to the cost to achieve the synergies again, which we’ll call those out as we progress that over the term.

Great. Thanks for taking my question. Congrats on closing the merger. I guess I had two questions. So first off, going back to the growth side, Berry, I think, struggled with low single-digit volume growth for the last few years. They did start to have some line of sight to that going forward, but it was somewhat elusive. So maybe you can just comment on if that’s something that you see that’s still within the crosshairs for the combined company. And then secondly, on the procurement side, I appreciate the math on the 2% to 3% reduction there and that does square with the synergy guidance. But it’s just a little bit surprising given that Berry was already such a large buyer of resin as you were as well. And so I think you mentioned that there are many other terms that you can kind of work through to achieve those synergies. So can you just confirm that it’s not just price, maybe long-term supply agreements or whatever else to get those? Thanks.

Yeah. Let me work through that. And on the growth side, I would probably agree with the assessment of Berry’s growth profile, low single-digit growth. We have seen that. I would say that’s not much different from what Amcor has seen over longer periods of time. And we are going to have an opportunity as we combine the company to drive that into higher levels on a sustainable basis. The portfolio realignment and pruning will certainly help on that end. And we have a broader product portfolio that we can offer to customers at scale and globally. We have leverage opportunities in the products that we talked about. Think about the established base of Amcor in Latin America and Asia-Pacific and the Berry products that we can sell through the existing network. And I would say those are the most important levers that I would see to get ourselves into a stronger growth trajectory going forward and we have made that a real priority for the company. So that’s the growth side. On the procurement side, look, I don’t know how much I can add to this, to be honest with you. I think the most important thing that we have is it’s a very complimentary buy and the party that has the bigger scale typically has the better terms. And that is something that we can roll out as we combine the two companies. So think in that direction because there’s real value there. Now, in terms of terms, yes, there is more than price and other things that you can look at. No question. And we will have to take a comprehensive approach and we’ll do all the things that you have at your fingertips to drive the conversation. And we’re not against long-term supplier relationships if that drives value, mutual value on both sides.

Yeah. Thank you, Operator. Look, thanks for the interest to everybody here on the call. I just want to make a comment here in closing with the merger now completed. Amcor really is better positioned than ever to meet customer and consumer needs as the markets continue to evolve. We are really thrilled to welcome our new colleagues, customers, and shareholders. And as far as I’m concerned, this is day one of an exciting and an incredibly strong future for Amcor and all our stakeholders. Thank you, Operator. Please close the call.