Amcor (AMCR) Q3 FY26 earnings call: guidance and Q&A

Will the Middle East conflict have a residual impact on calendar H2 2026, especially given Berry's contract structure and the recent resin price increase? How is Amcor mitigating this?

Amcor has minimal exposure to the Middle East and expects no material impact on Q4. Beyond Q4, the company assumes pass-through mechanisms and customer relationships will continue to offset cost increases. They use a collaborative approach with customers for the 70% contracted business, justifying costs and ensuring supply continuity.

“Our planning assumption is that our pass-through mechanisms and the relationships we have with our customers will continue to offset the cost environment. So on a Q4 basis, as we talked, no material impact, and that would be the same assumption as we look beyond Q4, given the mechanisms that are in place to offset either in an inflationary environment or if it were to revert to the other direction.”

asked by Ghansham Panjabi · answered by Stephen Scherger

Given the $300 million reduction in FCF guidance due to rising inventories, should we expect a continued FCF penalty in the quarters following Q4 FY26?

The FCF impact is primarily a Q4 effect driven by inflation on inventory. Moving beyond Q4, it's unpredictable and depends on market stabilization. The company does not necessarily assume an ongoing FCF headwind, expecting supply chain normalization to mitigate future impacts.

“I think it's probably a little unpredictable to determine whether that cash flow impact is -- continues to rise or kind of stabilizes as the supply chains stabilize. So I think I wouldn't necessarily assume that there's an ongoing cash flow headwind. I think it will depend upon supply chain normalization in the environment.”

asked by Jeffrey Zekauskas · answered by Stephen Scherger

How is the consumer behaving, especially with recent cost impacts? Can you detail Q3 volume performance?

Q3 volumes were down 1.5%, a 100 bps sequential improvement. Core and noncore were equally down 1.5%. Noncore improved significantly. North America was weaker due to winter storms, Europe better, and emerging markets saw mid-single-digit growth. Focus categories outperformed. The consumer is stretched, leading to value-seeking, but customer commitment to supporting volumes is encouraging.

“The company was down 1.5% in the third quarter, and that is 100 basis points improvement sequentially versus the prior quarter. The 1.5% is equally split between the core and the noncore business.”

asked by Ramoun Lazar · answered by Peter Konieczny

Has Amcor been able to gain market share given its global presence and product availability amidst supply chain challenges?

It's too early to definitively say, but Amcor is well-positioned with a broad supply network and global procurement. They have heard from customers seeking help due to issues with incumbent suppliers, indicating potential for share gains, but it's still early.

“The only thing I can tell you is that in some cases, we have heard -- we've had conversations with customers that came to us and said, 'Hey, can you help out because we are seeing some issues with incumbent suppliers in some cases?' And we obviously try to help where we can, and that gives you an indication. But I will say, overall, it's still early.”

asked by Michael Roxland · answered by Peter Konieczny

How will gearing profile over the next 12 months, and what are the key drivers to return to the target leverage range?

The modest uptick in year-end leverage is due to lower volumes and inventory impact. Amcor is absolutely committed to deleveraging to 3x or below. Key drivers include completed and expected divestitures, continued synergy capture, and strong cash flows. They see a clear path to 3x leverage by fiscal/calendar 2027.

“I think very importantly, our commitment to our investment-grade rating, our commitment to deleveraging back to 3x or below is absolute. And given the actions that we're taking, both in the form of the divestitures that we've completed, those which we expect to complete as well as continued synergy capture as we look out over the next 12 to 18 months, we can see line of sight back towards that 3x leverage range as we look out towards really fiscal -- the new fiscal and calendar 2027.”

asked by John Purtell · answered by Stephen Scherger

Did the composition of noncore businesses change during the fiscal year, and has the Middle East conflict impacted the divestiture timeline?

The noncore portfolio composition has not changed, as it was based on a solid strategic assessment. The Middle East conflict has not impacted the timeline. Progress on divestitures is encouraging, especially for the North American beverage business, which has shown improved financial performance, supporting the divestment process.

“The answer to your first question is, has the portfolio of the noncore businesses changed? The answer is no. And we never intended to do that.”

asked by Anthony Pettinari · answered by Peter Konieczny

Can you provide examples of growth synergies where Amcor won new contracts by combining Amcor and Berry products?

Growth synergies have reached $110 million annualized, tracking well towards the $280 million target. An example is a global pharma customer seeking different packaging formats (blister for Europe, rigid container for North America) for an oral dose GLP-1 drug, which the combined Amcor-Berry could fulfill due to complementary product portfolios and multi-regional capabilities.

“In Europe, it was a blister format. In North America, it was a container format -- a rigid container format. So almost an opportunity that was made for the combined Amcor-Berry. We had the opportunities. We had the product. We were multiregional, and that has led to the closing of a good contract.”

asked by Hillary Cacanando · answered by Peter Konieczny

Healthcare and Nutrition were called out as areas of weakness, despite being focus areas. Can you comment on this, especially Healthcare which was expected to improve?

Five out of six focus categories were flat or up low to mid-single digits, but Healthcare was weaker. Healthcare volumes were slightly down due to U.S. winter storms impacting production and customer pull-through, and a weaker cold and flu season. Nutrition weakness was in discretionary categories outside of focus areas, with a trend towards value-oriented essentials.

“The volumes in healthcare were slightly down, but we have good positive mix. And when you go to the volumes, the U.S. winter storm impacted a few sites in terms of both our production, but also the customer pull-through. And when you look to our customers, you will see that we also had a bit of a weaker cold and flu season.”

asked by Gabe Hajde · answered by Peter Konieczny