In a statement following its release of financial results for the six months to 31 December 2006, the Australian-based packager said it planned to lessen the impact of increasing energy and raw materials costs by cutting its global production capacity and its supply chain.
Amcor also said that it was considering a partial or total sale of its PET production facilities in Western Europe after seeing a 13 per cent fall in global profits to €110m from €127m over the same period last year.
The company's managing director, Ken MacKenzie, suggested that though PET packaging in the Western Europe boasted promising growth, the company was not able to focus on consolidating its position and meeting its global expansion aims.
"Amcor has prioritized its growth opportunities and has decided that it is not able to fund its global growth plans and also lead the European PET consolidation process through acquisition," he said. "Therefore, we have decided to sell part, or all, of the European PET business."
Amcor reiterated this drive for lower costs by also announcing changes to its regional production of flexible packaging, by moving the operations to Poland.
Through the construction of a €26m production plant in the country, Amcor believes it will be in a string position to increase competitiveness within its multinational market for flexible products.
With emerging markets like Poland offering a lower cost alternative for production of its goods, MacKenzie added that the group would be concentrating much more in the region.
"In 2005, 32 per cent of sales were in Western Europe and this will be reduced to around 20per cent by 2009. In emerging markets, sales will increase from 12 per cent to around 20 per cent over the same time frame," he said.
Along with shake-ups to its European production, Amcor announced it would also be closing four of its fiber production plants in Australia to improve performance of its operations within the sector.
The sites which supply carton and paper based packaging predominantly for the beverage and fast food industries will be closed as part restructuring measures designed to bring it in line with the growing demand for Amcor's flexible and rigid packaging products.
Besides facing increasing operation costs and negative climatic factors in Australia, MacKenzie is confident that Amcor is on target for a more encouraging second half performance over the coming months.
"For the second half of the year, Amcor's input costs will continue to be substantially higher than a year ago, and there will be a more significant impact on volumes from the drought in Australia. Notwithstanding these factors, earnings are expected to be higher than the second half of last year," he said.
