Amcor expects the deteriorating economic conditions in Venezuela and a restructuring of its flexibles business elsewhere to hit its profits over the next two years.
As AAP reports, the packaging giant’s rigid plastics business in Venezuela will be hit by a one-off charge of $US350 million ($A468.35 million) this year.
The company said in a statement state of the Venezuela economy has negatively affected its access to US dollars and therefore its ability to import raw materials.
Amcor CEO and Managing Director, Ron Delia said the company’s investment in Venezuela should be viewed from a long term perspective and that the action will help reduce risk.
“Importantly, Amcor will continue to generate strong cash flow and the ability to fund capital expenditure, acquisitions or dividends is unchanged,” he said in a statement.
On top of this, the company announced a restructure of its flexibles business. This will include streamlining organisation, particularly in Europe and the closure of plants in developed markets.
The restructuring will cost between $US120 million and $US150 million over the 2017 and 2018 financial years; and the company expects pre-tax profits to fall by between $US170 million and $US200 million over the current and next financial year.
“Amcor has strong flexible and tobacco packaging businesses in the developed markets with leading market positions which provide a solid platform for future growth. To build on that strong foundation, it is critical we continue to take decisive steps to align the organisation with market growth opportunities and customer needs,” Delia said.