Amcor to demerge Australasia business

Global packaging firm Amcor says the time is right to split its Australasia and Packaging Distribution (AAPD) business from Amcor's other operations. Amcor said the demerger of AAPD into a separately listed company on the Australian Securities Exchange would enable both the new Amcor and the separated business to pursue their own strategies and growth plans.

The new Amcor will focus on making flexible and rigid plastic packaging and tobacco packaging mostly for overseas markets, while AAPD will focus on the fibre, glass and beverage can packaging markets in Australasia, plus packaging distribution in North America and Australia.

"Although the new Amcor and AAPD are both packaging companies, they are actually very different in terms of product segments and geographic focus," Amcor chief executive Ken MacKenzie said on Thursday. He said Amcor had been transforming its operations - including AAPD - over the last eight years, abandoning some market segments, closing various manufacturing facilities, reducing the size of the workforce, and expanding into other areas. "The reason (for the demerger) now is that it's the right time," Mr MacKenzie said. "Those important transformation agendas are largely behind us."

More than $1 billion had been invested in AAPD over the past four years to support future profit growth. Mr MacKenzie said AAPD's underlying earnings, which excludes one-off significant items, had been strong and broadly consistent over those four years despite the strong Australian dollar and rising costs. AAPD has 26 large-scale plants, employing about 5,000 workers. Two-thirds of its sales are generated in Australasia and one-third from North America. The demerger, which needs shareholder approval, is expected to be completed by December 2013.

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