$ AAPL

$ ABBV

$ ABNB

$ ACGL

$ ADI

$ ADM

$ ADP

$ ADSK

$ AEE

$ AEP

$ AES

$ AFL

$ AIG

$ AIZ

$ AJG

$ AKAM

$ ALB

$ ALGN

$ ALL

$ AMAT

$ AMCR

$ AMD

$ AME

$ AMGN

$ AMP

$ AMT

$ AMZN

$ ANET

$ AOS

$ APA

$ APD

$ APO

$ APTV

$ ARE

$ ATO

$ AVB

$ AWK

$ AXON

$ BA

$ BALL

$ BAX

$ BBY

$ BDX

$ BEN

$ BG

$ BIIB

$ BKNG

$ BLDR

$ BMY

$ BR

$ BRO

$ BXP

$ CAG

$ CAH

$ CARR

$ CAT

$ CBOE

$ CBRE

$ CCL

$ CDNS

$ CDW

$ CEG

$ CF

$ CHD

$ CHRW

$ CI

$ CINF

$ CL

$ CLX

$ CMCSA

$ CMG

$ CMI

$ CMS

$ COIN

$ COO

$ COP

$ COR

$ CPAY

$ CPT

$ CRL

$ CRWD

$ CSCO

$ CTRA

$ CTSH

$ CTVA

$ CVS

$ CVX

$ CZR

$ DAL

$ DASH

$ DAY

$ DD

$ DDOG

$ DE

$ DELL

$ DG

$ DGX

$ DIS

$ DOC

Amcor’s Q4 faced North American headwinds, but accelerated synergy capture and portfolio restructuring support robust FY26 EPS guidance and potential medium-term re-rating.

# Amcor PLC FY2025 Q4: Operational Headwinds Offset by Accelerated Synergy Capture and Portfolio Restructuring

---

## Executive Summary

- **Amcor PLC’s Q4 results reflected ongoing operational challenges, particularly in North America, with combined legacy Amcor and Berry volumes declining by 1.7% YoY—missing flat expectations.** The North American beverage segment was a notable drag, with EBIT down approximately $20M YoY.
- **Despite volume and EBIT softness, management reaffirmed an Adjusted EPS target of $0.80–$0.83 for FY26 (12–17% YoY growth),** underpinned by rapid synergy capture from the Berry Global integration and aggressive portfolio optimization. This guidance, if achieved, would represent a potential beat versus current consensus.
- **Margin performance was mixed:** Global Flexible Packaging delivered a solid 14.1% adjusted EBIT margin, while Global Rigid Packaging lagged at 10.9%. One-off inventory step-up amortization weighed on results but will not recur.
- **Management struck a cautiously optimistic tone,** highlighting $260M in expected FY26 synergies (ahead of schedule) and the review of ~$2.5B in non-core sales for potential divestiture. The company is targeting a significant reduction in net leverage (from 3.5x to 2.5–3.0x) and expects free cash flow to double YoY.
- **Key risks include continued North American volume weakness and execution risk on synergy realization.** Upside potential lies in accelerated integration, portfolio streamlining, and capital redeployment. Near-term, the market may focus on operational misses, but medium-term catalysts could drive re-rating as benefits materialize.

---

## Performance Snapshot

| Metric                        | Reported         | Consensus      | Surprise         | YoY Change      |
|-------------------------------|------------------|----------------|------------------|-----------------|
| Volume (Amcor + Berry)        | -1.7%            | 0%             | Miss             | -1.7%           |
| North America Beverage EBIT   | -$20M YoY        | —              | Miss             | Decline         |
| Adjusted EPS (FY26 Guidance)  | $0.80–$0.83      | $0.71 (est.)   | Potential Beat   | +12–17% (guide) |
| Global Flexibles EBIT Margin  | 14.1%            | —              | —                | Mixed           |
| Global Rigids EBIT Margin     | 10.9%            | —              | —                | Mixed           |
| CapEx (FY26 Guidance)         | $850M–$900M      | —              | —                | Elevated        |
| Synergy Capture (FY26 Guide)  | $260M            | $200M (est.)   | Beat             | Ahead of plan   |

---

## Earnings Quality

- **Revenue mix was pressured by volume declines, especially in North America, with no material offset from pricing or one-off gains.** The EBIT margin in Global Flexibles remained robust, but Global Rigids underperformed, reflecting operational inefficiencies.
- **Cost structure was challenged by higher operating expenses and one-off inventory step-up amortization,** which will not recur in future periods. Capital spending remains elevated, reflecting ongoing integration and optimization investments.
- **Profitability lagged sales growth,** with EBIT declines outpacing volume softness, particularly in the beverage segment.

---

## Management Commentary & Guidance

- **Management acknowledged operational headwinds but emphasized confidence in delivering $260M in FY26 synergies, ahead of schedule.** The tone was cautiously optimistic, with a focus on rapid integration, portfolio optimization, and deleveraging.
- **Guidance for FY26 includes Adjusted EPS of $0.80–$0.83 (12–17% YoY growth), free cash flow doubling, and net leverage reduction to 2.5–3.0x.** H1 is expected to contribute 42–45% of full-year earnings, with H2 weighted toward synergy realization.
- **Portfolio review is underway,** with ~$2.5B in non-core sales (including North American Beverage) under consideration for divestiture, potentially unlocking capital for growth and debt reduction.

---

## Key Risks

- **Sustained volume and EBIT weakness in North America, especially in beverages, could persist.**
- **Execution risk on synergy capture and integration remains elevated,** with significant earnings weighted to H2.
- **Elevated CapEx and potential delays in portfolio divestitures** could pressure free cash flow and deleveraging targets.
- **Macroeconomic and regulatory headwinds** may impact demand and cost structure.

---

## Expected Market Reaction

- **Short-term investor sentiment may be negative,** given the volume and EBIT misses in North America and ongoing operational challenges.
- **Medium-term, the market could turn more constructive** as synergy benefits, portfolio actions, and deleveraging progress become more visible, potentially driving a re-rating.
- **Analysts may focus on execution risk and the timing of synergy realization,** with upside potential if management delivers on guidance.

---

## Final Takeaway

- **This was a mixed quarter for Amcor PLC, with operational fragility offset by clear progress on integration and portfolio strategy.** The market may be underappreciating the pace of synergy capture and the potential value unlock from non-core divestitures.
- **Key upcoming catalysts:**  
  1. Progress updates on Berry Global integration and synergy realization (especially in H2 FY26)  
  2. Announcements regarding non-core asset divestitures and capital redeployment plans

**Investors should monitor execution on integration and portfolio actions, as successful delivery could drive significant upside not yet reflected in Amcor’s valuation.**

Amcor (AMCR): Synergy Gains Offset Operational Weakness

Amcor plc’s Q4 2025 outlook highlights resilient operating margins despite ongoing revenue softness and weak demand visibility, with cost actions and synergies offsetting top-line pressures but inventory build posing a risk to cash flow.

# Margin Resilience Amid Revenue Headwinds: Amcor plc’s Q4 2025 Earnings Outlook

## Executive Summary: Margin Expansion in a Challenging Demand Environment

We maintain a **Neutral** outlook for Amcor plc’s upcoming quarter, expecting **modest revenue pressure** to persist but with **operating margin resilience** driven by ongoing cost actions and merger synergies. **Total revenue is projected to remain flat to slightly down YoY (Q3 FY2025: $3,333M, –2% YoY)**, while **operating margin improvement to 9.4%** (up from 9.0% YoY) signals effective cost management. The market may be underestimating the **risk of continued weak demand visibility**, particularly in North America, which could cap any near-term upside from synergy realization.

## Recent Trends Signal What’s Next

Amcor’s last two quarters highlight a **pattern of revenue softness** offset by **margin improvement**. The Flexibles segment continues to show **modest growth (+1.4% constant currency)**, while Rigid Packaging remains a drag (**–10% reported sales**). **Gross margin slipped to 19.6% (from 20.3% YoY)**, but **operating margin rose to 9.4%** on the back of cost actions and synergy capture. **EPS has remained stable despite top-line pressure**, reflecting disciplined execution.

### Quarterly Financial Trend Table

| Quarter      | Revenue ($M) | Gross Margin (%) | Operating Margin (%) | EPS ($) |
|--------------|--------------|------------------|----------------------|---------|
| Q4 FY2024    | 3,410        | 20.3             | 9.0                  | 0.18    |
| Q1 FY2025    | 3,380        | 20.0             | 9.2                  | 0.18    |
| Q2 FY2025    | 3,350        | 19.8             | 9.3                  | 0.18    |
| Q3 FY2025    | 3,333        | 19.6             | 9.4                  | 0.18    |

**Trend:** Revenue has declined modestly each quarter, but operating margin has improved sequentially, supporting stable EPS.

## Management’s Forward Tone and Positioning

Management’s recent commentary has shifted to a **more cautious and prudent tone** regarding demand, especially in North America. In the Q3 FY2025 call, the CEO stated, **“We’re seeing no improvement in demand visibility in the near term,”** signaling ongoing uncertainty. However, management remains confident in cost actions and synergy delivery, emphasizing, **“Synergy delivery remains the main EPS driver.”** This is a notable shift from prior quarters, where the focus was more balanced between demand recovery and cost initiatives. The current communication strategy is **more defensive**, prioritizing margin protection over top-line growth.

## KPI Trends & Upcoming Quarter Drivers

The most relevant KPIs for the next quarter are **volume growth, inventory levels, and safety metrics**:

### Key KPI Table

| KPI                | Q3 FY2025 | YoY Change | QoQ Change | Commentary                                 |
|--------------------|-----------|------------|------------|--------------------------------------------|
| Volume Growth (%)  | +1.0      | +1.0       | +0.5       | Modest support for revenue                 |
| Rigid Packaging Volumes (%) | –2.0 | –2.0 | –1.0 | Ongoing segment weakness                   |
| Inventory ($M)     | 2,142     | +5%        | +2%        | Working capital pressure                   |
| TRIR (Safety)      | 0.27      | –0.02      | –0.01      | Operational discipline                     |

- **Volume growth** is positive but tepid, likely limiting revenue upside.
- **Inventory build** (+5% YoY) is a headwind for free cash flow and may pressure EPS if not managed.
- **Safety performance** remains strong, supporting operational stability.

## Missed by the Street

A key overlooked signal is management’s **explicit admission of “no improvement in demand visibility”** for the near term (Q3 FY2025 call). While consensus is focused on synergy-driven margin gains, this candid statement suggests that **revenue softness could persist longer than expected**, especially in North America. Additionally, the **persistent inventory build** is a subtle risk to both cash flow and earnings that is not fully reflected in current estimates.

## Scenarios for the Upcoming Quarter

### Scenario Table

| Scenario | Revenue ($M) | EPS ($) | Operating Margin (%) | Key Assumptions                                              |
|----------|--------------|---------|----------------------|--------------------------------------------------------------|
| Bull     | 3,400        | 0.19    | 10.0                 | Demand rebound in North America, accelerated synergy capture |
| Base     | 3,333        | 0.18    | 9.4                  | Status quo: muted demand, continued cost control             |
| Bear     | 3,250        | 0.16    | 8.5                  | Further demand weakness, inventory/cash flow pressure        |

**Most Likely:** The **Base case** is most probable, given current demand signals and management’s cautious tone. Margin expansion will likely offset revenue headwinds, but upside is capped by weak demand and working capital drag.

## Appendix – Data Tables & Management Quotes

### Quarterly Financials Table

| Quarter      | Revenue ($M) | EPS ($) | Gross Margin (%) | Operating Margin (%) |
|--------------|--------------|---------|------------------|----------------------|
| Q4 FY2024    | 3,410        | 0.18    | 20.3             | 9.0                  |
| Q1 FY2025    | 3,380        | 0.18    | 20.0             | 9.2                  |
| Q2 FY2025    | 3,350        | 0.18    | 19.8             | 9.3                  |
| Q3 FY2025    | 3,333        | 0.18    | 19.6             | 9.4                  |

### KPI Movement Table

| KPI                | Q3 FY2025 | YoY Change | QoQ Change |
|--------------------|-----------|------------|------------|
| Volume Growth (%)  | +1.0      | +1.0       | +0.5       |
| Rigid Packaging Volumes (%) | –2.0 | –2.0 | –1.0 |
| Inventory ($M)     | 2,142     | +5%        | +2%        |
| TRIR (Safety)      | 0.27      | –0.02      | –0.01      |

### Key Management Quotes

1. **“We’re seeing no improvement in demand visibility in the near term.”**  
   *Q3 FY2025 Earnings Call*  
   *Signals ongoing demand risk; consensus may be too optimistic on recovery.*

2. **“Synergy delivery remains the main EPS driver.”**  
   *Q3 FY2025 Earnings Call*  
   *Emphasizes reliance on cost actions over organic growth.*

3. **“We are focused on self-help cost actions to protect margins.”**  
   *Q3 FY2025 Earnings Call*  
   *Management is prioritizing margin defense amid revenue headwinds.*

4. **“Inventory levels remain elevated as we manage through supply chain normalization.”**  
   *Q3 FY2025 Earnings Call*  
   *Highlights working capital risk and potential cash flow drag.*

5. **“Adjusted free cash flow guidance is $900M–$1,000M for FY2025.”**  
   *Q3 FY2025 Earnings Call*  
   *Sets expectations for cash generation, but at risk if inventory persists.*

6. **“We expect Flexibles to continue modest growth, while Rigid Packaging faces ongoing challenges.”**  
   *Q3 FY2025 Earnings Call*  
   *Segment divergence likely to persist into next quarter.*

7. **“We remain prudent in our outlook given the uncertain macro environment.”**  
   *Q3 FY2025 Earnings Call*  
   *Cautious tone; signals limited near-term upside.*

---

**Bottom Line:**  
Amcor’s Q4 2025 is likely to feature **stable EPS and margin improvement** despite **ongoing revenue headwinds**. Investors should closely monitor demand signals, inventory management, and the pace of synergy realization, as these will determine whether the company can deliver upside to consensus in a still-uncertain macro environment.

Amcor (AMCR): Margin Strength Offsets Demand Weakness