The company said yesterday it will close its Box Hill corrugated cardboard factory and upgrade its two remaining low-cost plants in Victoria. It is also considering building a new paper recycling plant in New South Wales as part of a plan to save A$60 million to A$80 million per year.
The firm's Australasian business, its biggest of all global markets, reported flat sales for the full year and profits before tax and interest down 16.9 per cent to A$262.4 million.
While demand for aluminium beverage cans rose 6 per cent, largely due to growth in the multi-pack soft drink segment, and glass wine bottles also performed well, corrugated cardboard box volumes fell 5 per cent.
The decline in demand was partly due to loss of customers like Fonterra and some sales lost to competition offering lower priced carton board but also weaker demand from the fruit and produce sector which was hit by cyclone Larry.
Amcor also blamed the continuing trend for importing foods processed and packaged offshore.
It said the Australasian business would continue to see lower earnings into 2006-07 owing to the restructuring charges but beyond this, corrugated and flexibles would improve with "operating efficiencies delivering a lower cost base".
In its other operations, Amcor reported good growth in PET packaging, its largest division, with sales up 9.5 per cent to $4.05 billion. Strong sales in the US and Europe were slightly offset by poor performance in Latin America.
The strong demand allowed the world's biggest maker of plastic bottles to pass on some the rising energy costs related to PET production.
In the Flexibles business, which mainly serves western European food markets with film-based packaging and foil, substantially higher resin costs were largely recovered through price increases by the end of the year, although the firm warned that there will be further pressure on raw material prices, like aluminium foil and energy, which will need to be recovered in the future.
The division also recorded a loss on the sale of its metal closures making business in Germany, White Cap.
Chief executive Ken MacKenzie said the company will continue considering asset sales to improve earnings.
