Description
Amcor: Initiation Of Coverage – The Berry Global Deal Is A $650 Million Catalyst Wall Street May Reprice!
Amcor plc reported third quarter fiscal 2026 results reflecting the first anniversary of its combination with Berry Global, with integration progressing smoothly and synergy delivery accelerating. The company emphasized safety as a top priority, achieving an industry-leading injury-free rate at 71% of sites, despite a modest increase in total recordable incidents linked to recent acquisitions. Amcor navigated a challenging environment marked by inflationary pressures and geopolitical risks, especially the Middle East conflict, which the company reported as having no material impact on third quarter or expected fourth quarter earnings due to proactive supply management, diversified sourcing with minimal Middle East resin dependence, and effective price pass-through mechanisms. Financially, Amcor posted third quarter revenues of $5.9 billion, with EBITDA of $892 million and EBIT of $687 million, significantly boosted by the Berry acquisition along with disciplined cost control and synergies. Adjusted earnings per share increased 6% year-over-year to $0.96, with year-to-date EPS growth of 11% to $2.79 per share. The company maintained a modestly growing quarterly dividend at $0.65 per share in line with capital allocation priorities. Free cash flow was negative $39 million for the quarter due to $78 million in Berry-related transaction and integration costs and elevated inventory levels aimed at ensuring supply continuity amid supply chain disruptions. Fiscal 2026 free cash flow guidance was revised lower to $1.5–$1.6 billion from $1.8–$1.9 billion previously due to this timing impact, although deleveraging remains a priority with adjusted leverage at 3.8x and expected to fall to approximately 3.4–3.5x by year-end.
