Amcor passed on higher costs. Why cut its profit target?
Raw-material cost recovery lifted sales. A lag in charging for energy and distribution has changed the profit outlook.
Amcor is charging customers more to cover higher raw-material costs. That helped lift quarterly sales, but it has not protected the packaging maker's profit forecast from another set of bills.
The company cut its adjusted earnings target for the six months ending December 31 to $1.70 to $1.80 a share, down 10 cents at both ends. It blamed the time needed to pass higher energy and distribution costs on to customers.
The distinction matters. More revenue from recovering material costs can coexist with pressure on profit while other costs wait to be recovered.
The assumption that changed
Research by Ticker Byline shows that Amcor's original forecast had assumed pricing would offset inflation. On its August results call, chief financial officer Stephen Scherger said that relationship was a fundamental assumption for the six-month period. The November reduction puts a cost-recovery lag into an outlook that previously assumed the two would balance.
Amcor says actions are underway to recover the higher energy and distribution costs and expects no effect on its 2027 results. That makes the speed of recovery a concrete test of the company's next update.
The six-month forecast covers July through December because Amcor is changing its year-end from June to December. Its first full calendar reporting year will be 2027.
What the sales increase contains
Sales for the September quarter rose 7% to $6.13 billion. The company attributed $435 million of revenue to passing through raw-material costs. After currency movements and divestitures, the remaining sales increase was $45 million, or about 1%, reflecting higher volumes.
That is a much smaller underlying improvement than the headline sales growth suggests. It also explains why a bigger revenue total did not bring a similar rise in profit.
| Measure | 2025 | 2026 |
|---|---|---|
| Sales | $5,745 | $6,129 |
| Adjusted operating profit (EBIT) | $687 | $689 |
| Adjusted earnings per share | $0.97 | $0.95 |
| Operating cash flow | −$133 | −$527 |
Adjusted operating profit was nearly unchanged despite about $50 million of operating benefits from the Berry acquisition. Divestitures reduced profit, while volumes and other operating changes supplied offsets. Under GAAP, net income fell to $242 million from $262 million.
Cash is the other recovery to watch
Operating cash flow was negative $527 million, compared with negative $133 million a year earlier. Amcor linked the larger outflow to more cash tied up in inventory and customer receivables amid raw-material price volatility associated with the Middle East conflict.
Net debt rose by $1.11 billion from June to $14.01 billion. In its latest presentation, the company said it expects to recover a cumulative cash-flow impact of more than $500 million from the conflict by the end of 2027.
Amcor still expects double-digit adjusted earnings growth in 2027, supported by further Berry benefits, and targets lower leverage by that year-end. For investors, the next evidence is whether recovering costs also begins to release cash. The Amcor company profile tracks the revised targets, cash and debt, and progress integrating Berry.