Amcor plc (AMCR): Boston Consulting Group Matrix [10-2024 Updated]

As we delve into the dynamics of Amcor plc (AMCR) in 2024, we'll explore the company's strategic positioning through the lens of the Boston Consulting Group Matrix. Discover how the firm’s Flexibles segment shines as a Star with impressive year-over-year net income growth, while its Rigid Packaging business presents challenges as a Dog. We'll also uncover the potential of its joint ventures as Question Marks and the steady cash flow from its Cash Cows. Stay tuned to understand the intricate balance of growth and stability in Amcor's portfolio.

Background of Amcor plc (AMCR)

Amcor plc ('Amcor' or the 'Company') is a public limited company incorporated under the Laws of the Bailiwick of Jersey. The Company has a history that spans over 150 years, with origins in both Australia and the United States. Today, Amcor is recognized as a global leader in developing and producing responsible packaging solutions across a variety of materials. Its products serve diverse end markets, including food, beverage, pharmaceutical, medical, home and personal care, and other consumer goods.

Amcor's innovation excellence and extensive packaging expertise enable the Company to address packaging challenges worldwide. They produce a range of flexible packaging, rigid packaging, cartons, and closures that are designed to be functional, appealing, cost-effective, and environmentally sustainable. In fiscal year 2024, Amcor employed approximately 41,000 people and generated $13.6 billion in annual sales from operations spanning 212 locations in 40 countries.

The Company is committed to sustainability, focusing on making packaging that is increasingly recyclable, reusable, and lighter weight, while also incorporating a growing amount of recycled content. Amcor works closely with leading companies globally to protect products, differentiate brands, and improve supply chains, ensuring that its packaging solutions meet the evolving needs of consumers and businesses alike.

Amcor plc (AMCR) - BCG Matrix: Stars

Strong performance in Flexibles segment

The Flexibles segment reported net sales of $2,552 million for the three months ended September 30, 2024, compared to $2,568 million in the same period of the previous year.

Net income increased by 26% year-over-year

Net income attributable to Amcor plc increased by $39 million, or 26%, for the three months ended September 30, 2024, reaching $191 million compared to $152 million for the same period in 2023.

Gross profit margin improved to 19.7%

The gross profit for the company was $659 million, leading to a gross profit margin of 19.7% for the three months ended September 30, 2024, up from 18.7% in the prior year.

Successful cost-saving initiatives driving profitability

Cost-saving initiatives contributed to an increase in gross profit of $14 million, alongside lower restructuring and related expenses, which decreased by $22 million.

Positive earnings per share growth, reaching $0.132

Diluted earnings per share (EPS) increased by $0.027, or 26%, for the three months ended September 30, 2024, resulting in an EPS of $0.132, compared to $0.105 in the same quarter of 2023.

Amcor plc (AMCR) - BCG Matrix: Cash Cows

Established market presence in Rigid Packaging

Amcor plc holds a significant market share in the Rigid Packaging segment, which generated net sales of $801 million for the three months ended September 30, 2024, compared to $875 million in the same period in 2023.

Consistent revenue stream despite a decline in sales

Despite a decline in sales of 8% year-over-year for the Rigid Packaging segment, Amcor continues to maintain a steady revenue stream. The overall net sales for Amcor plc decreased by $90 million, or 3%, to $3.353 billion for the same period.

Adjusted EBIT stable at 7.7% of net sales

Amcor's Adjusted EBIT for the Rigid Packaging segment remained stable at 7.7% of net sales, amounting to $62 million for the three months ended September 30, 2024, consistent with the previous year.

Strong cash flow generation supports dividend payments

Amcor generated a net income attributable to the company of $191 million for the three months ended September 30, 2024, which is a 26% increase compared to $152 million in 2023. This strong cash flow supports Amcor's dividend payments, which amounted to $180 million during the same period.

Significant market share in North America and Europe

In the North American market, the Rigid Packaging segment generated net sales of $605 million for the three months ended September 30, 2024, down from $676 million in 2023. In Europe, the segment reported net sales of $838 million.

Amcor plc (AMCR) - BCG Matrix: Dogs

Rigid Packaging Segment Showing Declining Sales

The Rigid Packaging segment of Amcor plc reported net sales of $801 million for the three months ended September 30, 2024, down from $875 million in the same period of 2023. This marks a significant decline of 8% year-over-year, primarily attributed to decreased sales volumes of approximately 4%.

Increased Competition Impacting Pricing Power

Amcor has faced increased competition in the Rigid Packaging sector, which has adversely affected its pricing power. The company noted an unfavorable price/mix impact of approximately 3% in its recent earnings report. This competitive pressure is limiting the company's ability to maintain margins and profitability in a low-growth market.

High Operational Costs Limiting Profitability

Operational costs remain high in the Rigid Packaging segment, with adjusted EBIT holding steady at $62 million for the three months ended September 30, 2024, compared to the same period last year. This equates to an adjusted EBIT margin of 7.7%, only slightly improving from 7.1%. The high cost structure continues to constrain overall profitability in this segment.

No Significant Growth Opportunities Identified in the Near Term

Amcor has not identified any significant growth opportunities within the Rigid Packaging segment for the near term. The ongoing market dynamics, including soft consumer demand and customer order volatility, suggest that growth is unlikely in the immediate future.

Limited Innovation in Product Offerings Compared to Competitors

Innovation within the Rigid Packaging segment has been limited compared to competitors, affecting Amcor's competitive positioning. The company's focus on cost savings and restructuring has detracted from investment in new product development.

Amcor plc (AMCR) - BCG Matrix: Question Marks

Rigid Packaging joint venture with Bericap North America

Amcor's Rigid Packaging segment reported net sales of $801 million for the three months ended September 30, 2024, a decrease of $74 million, or 8%, compared to $875 million during the same period in 2023. The joint venture with Bericap North America aims to enhance market penetration in the rigid packaging sector, which is critical for growth in beverages and food products. Adjusted EBIT for this segment remained consistent at $62 million, indicating stable profitability despite declining sales.

Potential growth in Latin America and Asia Pacific markets

Net sales in Latin America for the three months ended September 30, 2024, were $467 million, a slight decrease from $484 million in 2023. In Asia Pacific, net sales increased to $411 million from $401 million year-over-year. These regions are identified as high-growth markets, presenting opportunities for Amcor to enhance its market share, particularly in flexible and rigid packaging solutions.

Restructuring plan with uncertain outcomes

Amcor's 2023 Restructuring Plan, initiated following the sale of its Russian business, has an expected total cost of approximately $220 million. As of September 30, 2024, the company incurred $82 million in employee-related expenses, $32 million in fixed asset-related expenses, and $50 million in other restructuring costs. The restructuring is designed to streamline operations and reduce costs, but the outcomes remain uncertain, impacting the company's ability to leverage its Question Marks effectively.

Reliance on external market conditions for sales recovery

Amcor has faced challenges due to softer consumer demand and customer order volatility, significantly influenced by geopolitical tensions and inflation. The company's net sales for the three months ended September 30, 2024, were $3.353 billion, down from $3.443 billion in the same period in 2023. The reliance on external factors complicates the recovery of sales in Question Mark segments, necessitating strategic adaptability.

Need for strategic investments to enhance market position

To capitalize on its Question Marks, Amcor is expected to invest $110 million to $130 million of the proceeds from its Russian business sale into growth initiatives. This investment is aimed at enhancing its competitive position in rapidly growing markets and is critical for transitioning these Question Marks into potential Stars. The company's net debt increased to $6.872 billion as of September 30, 2024, reflecting ongoing investments and the need for strategic financial management.

In summary, Amcor plc's positioning within the BCG Matrix reveals a complex landscape of opportunity and challenge. The company's Stars in the Flexibles segment demonstrate robust growth with a remarkable 26% increase in net income, while the Cash Cows in Rigid Packaging provide stable revenue despite facing sales declines. Conversely, the Dogs segment struggles with competition and operational costs, highlighting the need for innovation. Meanwhile, the Question Marks present potential growth avenues, particularly in emerging markets, but require strategic investments and careful management to capitalize on these opportunities. Overall, Amcor's future hinges on effectively navigating these dynamics to sustain its market leadership.

Article updated on 8 Nov 2024

Resources:

1. Amcor plc (AMCR) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Amcor plc (AMCR)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Amcor plc (AMCR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.