Amcor repositioning program developed to further strengthen and improve the European flexible packaging, converting and extrusion operations.

The primary objective of the Euorpean Flexibles business repositioning program, which is part of the Amcor broader “Way Forward” agenda, is to create a fitter organization with a smaller number of stronger businesses that are focused on customers and markets, consistent with Amcor’s strategy.

The project will deliver an estimated PBIT benefit of €30 million per annum for an estimated net cash cost of €60 million. The majority of the €30 million per annum benefit will be realised from 2009/10.

The overall headcount reduction, excluding divested sites, will be around 900 out of a total workforce of 7600 people. The final outcome will be determined following an extensive consultation process with a range of stakeholders.

Amcor’s Managing Director and CEO, Mr Ken MacKenzie said “This repositioning program delivers a wide range of improvements and better aligns the business to future market trends and customer needs.

“The anticipated benefits are robust and supported by headcount reductions and substantial operational improvements. With this improved operational focus and clearer strategic direction, the business will be well positioned to deliver solid growth and strong returns.”

Objectives

As outlined at the half year results in February, Amcor Flexibles has undertaken a detailed strategic and operational review of its packaging business and a comprehensive repositioning program has been developed. The primary objectives of this program are to:

- Strengthen market positions through better leverage of technology and manufacturing capabilities;
- Increase weighting in lower cost regions, particularly in Southern and Eastern Europe;
- Improve alignment to customer needs and market trends; and
- Create a strong platform for innovation and continued growth.

Background

The Flexibles market in Western Europe is approximately €9 billion in sales and includes a wide range of products and technologies, from simple films to complex multi-layer structures with high-performance properties. The packaging end markets segments are mainly food, healthcare and industrial.

The current manufacturing footprint in Europe is 38 plants, in 15 countries with seven plants in Southern Europe (Spain, Italy and Portugal) and one plant currently in each of Poland and Russia.

Restructuring Process

A detailed program of communication and consultation has begun with employees and customers.

Plant closure proposals will be prepared by local management. Once approved, these proposals will be presented to employees and their representatives for consultation in accordance with local and European legal requirements.

Over a two year time frame, €40 million will be spent on either new equipment or the relocation of major pieces of plant to ensure those plants allocated additional production volumes are appropriately equipped. This investment will be included in Amcor’s base capital expenditure.

As part of the portfolio review, some plants were identified as having little strategic importance and will be sold.

Source