Executive Summary
This report is based on the case study on Amcor Limited’s financial performance by using ASX information and an annual report. Amcor Limited is a leading global packaging company that operates in the packaging industry. The packaging industry is a broad sector that includes. Amcor operates globally, with a presence in over 40 countries and serving customers in more than 100 countries worldwide
This report is prepared based on the evaluation of the annual report and apply relevant accounting standard based on the company. It also elaborates on the business activities, finance, and financial performance including the debt-equity ratio and the effect of ratios on this organization. The main focus is on the property, plant, equipment, and intangibles component of the asset as it analyses the caring amount as well as adopted the accounting policies of this organization.
At the end of the part, the research component is included which discusses some points regarding their sustainability and social responsibility and also uses some analytical skills to critically emulate some issues concerning Amcor Limited.
1. Introduction
1.1. Purpose of this essay
The main purpose of this essay is to provide education to students about the financial statement, and international accounting standards to different business situations. The purpose of this essay is to accomplish ASX information and the Annual report of this business organization.
1.2. Core business of the company
The core Amcor business is based on the worldwide packaging company as they develop and produce reliable packaging for materials such as medical, personal care, food & beverage, and other products. It was established in 1896 that paper milling business which is created around Melbourne, Australia. It is considered a dual-listed organization where it was listed on the ASX (Australian Securities Exchange).
The company is around employed under 45,000 people and produces sales from operations of $14.5 US in some locations in over 40 countries. It deploys the knowledge of value chains and customer packing which is considered more functional and cost-effective for clients and sustains their environment.
This industry to which the company belongs to the design, production, and distribution of various types of packaging products used for the transportation, protection, and marketing of goods. The company’s offerings also include packaging-related services, such as design and development, and supply chain management. As a leading player in the packaging industry, Amcor’s success is closely tied to the growth and performance of the global economy, as well as trends in consumer behavior and demand for sustainable packaging solutions.
1.3. Different activities and business segments
Amcor Limited has two business segments i.e. flexible packaging and the second one is Complex and Rigid Plastics. The flexible packaging upgrades the packaging and folding of the cartons. This company has also four business units i.e. Flexible Europe, Flexible America, Flexible Asia Pacific, and Flexible Africa whereas Complex and Rigid Plastics is one of the biggest suppliers of complex plastic packaging. This company also has four business units in this segment i.e. Bericap closures, North America, Latin America, and North America beverages.
The activities For Amcor Limited are Designing, Changing, Coordinating, and Handling as they deliver solutions of packaging for energy drinks, coffee, aseptic dairy products such as plastic bottles, capsules, and pods, and so on.
2. Business and operating activities
2.1. Amcor Limited Operates
Amcor Limited is a supplier of packaging solutions that provides plastic, fiber, and metal products. It focused on flexible packaging, rigid packaging, specialty cartons, and closures. In other words, it operates in APET CPET, HDPE, and PETG. Amcor Limited is a growing industry as they maintained stability over the last year as they grow revenue 10 percent to $ 15 billion US. It is favorable in terms of all the activities which are done by Amcor Limited.
This company operates in multiple paths where they win through the leadership position and ability to differentiate their product through creative ideas and innovation (Amcor Annual Report, 2022).
2.2. Competitors of the company
This company has high competitors in terms of service, innovation, service, and quality of products. The main competitors of this company are
– The first Competitor is Aptar Group Limited is engaged in supplying some consumer dispensing and active packaging solutions and services. It is based on consumer goods, and home improvement packaging.
– The second competitor is Berry Global which is engaged in plastics where they are providing plastic packaging and safeguarding the solutions. It is based on paper and packaging, Polymers, and so on.
– The third competitor is TriMas which is a worldwide provider of products for clients in the products of consumer, aerospace, and markets. It is based on mechanical elements, engines, and so on.
– The Fourth competitor is Guala Closures Group which is engaged in the manufacturing of bottle closures. It is based on paper and packaging as well as metal products
2.3. Implications of these factors of Amcor Industry
Amcor Limited has several competitors that adversely impact some of the factors of Amcor Limited such as Weighing their cost, materials, design, and incorporating the best in sustainability practices as all these factors play a vital role in packaging materials. Therefore, Amcor Limited has committed to exploring and solution-oriented by designing all their packaging to be recyclable, and reusable by 2025.
3. Finances
3.1. How the company is funded?
The company is funded based on the combination of internal as well as external funds according to the annual report 2022. Internal sources involve the amount of money which are generated from operating activities as well as sales of assets whereas external sources involve the debt-capital market and borrowings from banks.
It analyses the financial structure of Amcor Limited is considered favorable with financial ratios such as the current ratio is 1.46 and debt-to-equity ratio is 0.48. Overall, this financial structure plays a vital role to monitor any changes in the future (CISION PR Newswire, 2022).
3.2. Financial Performance
Based on the annual report of 2022 and ASX, it analyses the financial performance of Amcor Limited by key elements i.e.
– In terms of net sales, this company has generated more sales in 2022 $14544 million than $12861 million in the year of 2021.
– In terms of Total assets, the total asset increased from the previous year i.e. $17426 in 2022 and $17188 in 2021.
– In terms of total liabilities, the total liabilities also increased from the previous year i.e. $13285 in 2022 and $12367 in 2021.
– Therefore, if total assets are more than total liabilities, then it means that Amcor Limited has positive net equity and net worth of Amcor Limited.
Capital structure
However, this ASX information provides some details on the capital structure of the organization at that time according to the 2022 Annual Report of Amcor Limited.A worldwide wrapping corporation with operations throughout more than 40 nations is Amcor Limited. The company’s financing arrangement included both equity and debt finance, as stated in its 2021 Annual Report. The capital structure of the corporation as of June 30, 2022, was in the following manner:
Equity:
Issued capital: USD 3,468 million
Reserves: USD 2,347 million
Total equity: USD 8.5 billion
Debt:
Short-term borrowings: USD 675 million
Long-term borrowings: USD 3.4 billion
Total debt: AUD 4.1 billion
Total capital: AUD 9,852 million
It is crucial to remember that a company’s capital structure can alter over time as a result of a variety of variables, including new stock issuances, repurchases of shares, repayments of loans, and new loans the issuance of shares To get the most current details about the organization’s capital structure, it is crucial to consult the most recent financial statements.
Debt-Equity Ratios
An international packaging business called Amcor Limited with headquarters in Melbourne, Australia, is traded on the Australian Securities Exchange (ASX) with the ticker symbol AMC. The organization’s capital structure, as stated in its 2022 annual report, consists of both borrowing and stock.
Debt: Amcor has roughly USD 4.1 billion in overall debt as of the completion of the 2022 fiscal year, encompassing debt that is both short- and long-term. The corporation had USD 675 million in short-term funding, while it had USD 3.4 billion in long-term debt.
Equity: Amcor had around USD 8.5 billion in equity at the conclusion of the 2022 fiscal year. This comprised the issued funding, savings, and residual profits of the business. At that time, the corporation had almost 1.23 billion regular shares in issuance.
As of a finding of the 2022 fiscal year, Amcor’s capital structure had a total debt-to-equity ratio of about 0.48, which indicates an equal ratio between debt and equity. As the company’s financial situation and capital requirements are liable to modify over time, it is crucial to keep in mind that the arrangement of capital may have altered subsequently. For the most recent information on the company’s capital structure, it is advisable to consult its most recent accounting records and regulatory documents
3.3. Event
According to the annual report 2022, there is no significant events which are occurred after the reporting date. Events can occur at any time as it was unpredictable whereas investors should also stay up to date on any growth that may impact the financial performance of Amcor Limited.
3.4. Accounting Policies
Based on research , there were no changes in accounting policies disclosed in the annual report 2022 because accounting policies are remain stable and consistent with the last year 2021. Therefore, it is noted that if there is changes in accounting policies then it adversely impacts the financial statement of Amcor Limited whereas investors also review any variations in policies to comprehend their implications for Amcor Limited (Amcor Annual Report, 2022).
3.5. Accounting Standard
Amcor Limited is expected to adhere to Australian accounting standards defined by the Australian Accounting Standards Board (AASB) because it is a company that is publicly traded on the Australian Securities Exchange (ASX).
The Australian Accounting Standards Board (AASB) develops international financial reporting standards (IFRS) equivalent for Australian corporate and governmental companies. The AASB is in charge of developing and upholding accounting standards as well as offering advice and assistance to organizations to ensure their adherence.
The accounting records of Amcor Limited have been prepared in accordance with Australian Accounting Standards and adhere to the rules established by the Australian Securities and Investments Commission (ASIC) and the Corporations Act 2001 .
An Independent external auditor independently reviews the company’s accounts payable in compliance with Australian auditing standards and the International Standard on Auditing (ISAs) published by the International Auditing and Assurance Standards Board (IAASB). The company’s annual report, which is accessible on the ASX website and Amcor’s investor relations page, includes the auditor’s report.
4. Assets-Property and plant and equipment and Intangibles
4.1. Carrying amount of each class
The carrying amount of each class of Property, Plant, and Equipment is carried out amount based on cost which is subtracted from the accumulated depreciation and expenses for new facility and equipment and that cost is up surging substantially the useful lives of existing Property, Plant and Equipment by using the Straight –line method. Based on the annual report, 2022, the carrying amount is $3646 million US.
4.2. Accounting Policies relating to Property, Plant, and Equipment
The accounting policies are related to Intangible assets adopted by this company. This cost involves the carrying amount of assets or recognized the cost of an item or as a separate asset if it is probable that future economic benefit will flow to the Amcor Limited and the cost of items could be measured and emulated reliably (CISION PR Newswire, 2022).
4.3. Intangible assets reported by Amcor Limited
According to the annual report, 2022 it was reported by Amcor Limited involves the trademark, software, goodwill, and other intangible assets these assets play a vital role in this business because they enable the company to safeguard its intellectual property and maintain a customer relationship.
4.4. Accounting Policies to Intangible Assets
Accounting Policies Related to Intangible Asset It is recognized the intangible asset at cost which involve the attributable directly to the acquisition as well as development costs. Using the straight–line method, it amortizes its tangible asset over its useful lives.
4.5. Impaired and Accumulated Impairment Losses
Based on the annual report, 2022 this company did not analyses and emulate any elements of Property, plant, and equipment as well as Intangible asset which are impaired. In this report, accumulated impairment losses are also not reported in this company.
5. Research Component
5.1. Key initiatives regarding their social responsibility and sustainability
Yes, Amcor is dedicated to sustainability and business social responsibility. The business has released a sustainability report that details the steps it has taken to make its operations more sustainable. As they are minimizing their release of greenhouse gases is one of their main goals. Using 2018 as the beginning, Amcor has set a goal to cut its greenhouse gas emissions by 25% by 2025. They are doing this by making investments in energy-efficient machinery, increasing their reliance on energy produced from renewable sources, and raising the effectiveness of their transportation systems. The Amcor Limited is committed to cutting waste from its activities. By 2030, they hope to have 0% of garbage going to landfill by integrating trash reduction and recycling programs into their business processes, they have accomplished this. They are also creating compostable, recyclable, or other environmentally friendly packaging options (Amcor, 2022).
The key initiative of Amcor Limited is promoting sustainability throughout its supply chain. They work closely with their suppliers to ensure they meet their sustainability standards. They also encourage their suppliers to reduce their environmental impact, promote human rights and labor standards, and comply with ethical business practices. As far as social responsibility goes, Amcor Limited is dedicated to encouraging diversity and equal opportunity in the workplace. They think that their success depends on having a diverse and inclusive workforce and they are also dedicated to giving their workers a secure and healthy work environment and making sure they are handled with dignity and reverence (Amcor Sustainability Report, 2022).
Thus, the Amcor Limited also collaborates closely with neighborhood communities to aid with their growth. They contribute money and offer their time to support neighborhood programs that enhance the quality of life, education, and the environment
In the end, Amcor is dedicated to environmental sustainability and corporate social responsibility. They are committed to minimizing their environmental impact, promoting eco-friendly packaging options, encouraging inclusiveness and diversity at work, and helping out local communities. They are dedicated to continuing their initiatives to encourage sustainability in their operations and beyond. Their sustainability report details their strategies and advancements toward achieving sustainability.
5.2. Media stories or blogs or commentary about Amcor Limited initiatives
In my search for media coverage and analysis of Amcor Limited, it came across many pieces that discussed the company’s sustainability activities and strategy. In a paper from 2021 from the Australian Financial Review, it was stated how Amcor Limited has made sustainability a top priority for the corporation. Amcor’s goal of having zero waste going to landfills by 2030, its usage of renewable energy, and its emphasis on environmentally friendly packaging options were all emphasized in the article. The report also mentioned Amcor’s inclusion in the index of the Dow Jones Sustainability World Index as a result of its environmental programs (Amcor, 2022).
Another article from Packaging Europe in 2021 discussed Amcor’s commitment to reducing its greenhouse gas emissions. The article noted that Amcor had already reduced their emissions by 22% since 2018 and was on track to achieve their target of a 25% reduction by 2025. The article also highlighted Amcor’s use of renewable energy sources, including solar and wind power, in their operations.
While considering suspects about putting money ahead of people, it was unable to locate any reliable sources or proof to back up this assertion. On the other part, it is crucial to remember that Amcor Limited is a for-profit business, and as such its main objective is to make money for its stockholders. The company’s dedication to sustainability and CSR, however, implies that they are also considering the welfare of their workforce, communities, and ecosystem.
The media coverage and analysis of Amcor’s activities generally indicate that the business is making substantial efforts to achieve sustainability in its operations. Amcor’s recognition of its sustainability initiatives also implies that it is moving closer to fulfilling its sustainability goals. Even though it’s vital to maintain your skepticism and hold businesses responsible, the data suggests that Amcor is genuinely trying to prioritize sustainability and responsibility for society.
5.3. Modern corporate world
The concept of sustainability and social engagement (CSR) has grown in significance in the contemporary business environment, including for organizations like Amcor Limited. This shift has taken place for several reasons, such as altered consumer expectations, regulatory obligations, and awareness of the effects that businesses make on society as a whole and the surroundings. The Amcor Limited organized some social responsibility programs which enhance the morale of the workers in this organization and leads to more productivity. For up- surging efficiency, it would be impact on profitable.
There are some changes in customer expectations are one factor contributing to the rising importance of CSR and sustainability. Consumers nowadays are more conscious of the effects that businesses have on the surroundings and the community, and they are putting more and more pressure on businesses to accept accountability for their activities. While following Nielsen’s research, 79% of consumers worldwide strongly agree that businesses should do more to protect the surroundings.
In addition to consumer expectations, regulatory requirements have also played a role in the increased importance of CSR and sustainability. Governments around the world have implemented regulations to ensure that corporations take responsibility for their impact on society and the environment. For example, the Paris Agreement on Climate Change has set targets for reducing greenhouse gas emissions, and many countries have implemented regulations to reduce waste and promote sustainable practices.
Additionally, there is a rising understanding that businesses must address their effects on society and the environment because they have such a large impact on both. A variety of a variety of sources academic studies, press coverage, and official publications, have contributed to this recognition. For instance, the United Nations Environment Programmed (UNEP) found in a survey that up to 60% of the world’s greenhouse gas emissions were caused by businesses.
Lastly, due to the fact, they may have a large positive impact on their bottom line, CSR and sustainability have grown in importance for businesses like Amcor Limited. According to research, businesses with excellent CSR and sustainability practices often do better financially and retain more of their employees.
In summary, changing consumer expectations, regulatory requirements, awareness of the effect that corporations have on society and the environment, and the potential advantages for companies’ financial performance are all contributing factors to the increased importance of CSR and sustainability in the modern corporate world. Businesses like Amcor Limited are taking action to solve these challenges in their operations because they understand how important they are.
5.4. Covid-19 impact operations of Amcor Limited
Businesses all across the world have been significantly impacted by COVID-19, and Amcor Limited is no exception. Amcor Limited acknowledged that a global epidemic had caused major interruptions to company business in its 2021 annual report, including disruptions to the supply chain and decreased demand for certain of the goods it sells. Notwithstanding these difficulties, Amcor Limited claimed a rise in revenue of 3% for the year, with a strong demand for items used in food and medical packaging largely balancing a fall in demand for various other goods. In addition, the business revealed a net profit after taxes of $822 million, up 4.4% from the prior year.
The Amcor Limited’s 2022 annual report did not note any substantial loss of employment concerning the workforce. The business announced that it has implemented remote work policies, raised cleaning and hygiene standards in its facilities, and other efforts to safeguard the safety and well-being of its workers.
During the Covid-19, Amcor Limited face challenging situation where number of people are affected in terms of growth. At that time, the authorities are tried to reduce the level of infection, safeguard the vulnerable citizens and aids the medical attention. This situation is drastically affect the staffing as well as revenue of Amcor limited (Amcor Sustainability Report, 2022). Apart from this, Amcor provides and support their customer to deliver the food, beverages and healthcare product during covid-19 and donating the amount of money to surgical masks, medical supplies in Hospital as well as China Health Organization. This company is also focused on packaging by increasing light weight, reusable and recyclable for generating the more revenue or sales from operations. Amcor Limited continues their plans while keep people safe in the case of plants and raw materials supply chains to mitigate the risk and maintain the productivity .Overall, even though COVID-19 had a substantial influence on Amcor Limited’s operations, the business was able to overcome these difficulties and continue to have a profitable fiscal year in 2021 and next future years.
6. Finding and Conclusion
In this report, the finding is based on the competition of Amcor Limited with same industry i.e. Orora Limited. It has been observed that both Amcor Limited and Orora Limited have made commitments to sustainable and responsible business practices. For example, both companies have set targets to reduce their greenhouse gas emissions and have implemented initiatives to reduce waste and increase the use of recycled materials in their products.
In its most recent annual report, Orora Limited emphasized its commitment to sustainability and outlined several initiatives aimed at reducing its environmental footprint. These include the use of renewable energy, the implementation of energy-efficient manufacturing processes, and the development of more sustainable packaging solutions. The Orora Limited also highlights its commitment to ethical business practices and notes that it has implemented policies and procedures to ensure compliance with relevant laws and regulations.
Similarly, Amcor Limited has a strong focus on sustainability and CSR. The company has set ambitious targets to reduce its greenhouse gas emissions, increase the use of recycled materials in its products, and eliminate waste from its operations. Amcor Limited has also been recognized for its commitment to sustainability, receiving accolades such as the Dow Jones Sustainability Index World and the CDP Climate Change A-List.
In terms of CSR, Amcor Limited has established several programs aimed at promoting social responsibility and community engagement. These include partnerships with charitable organizations and initiatives to promote diversity and inclusion within the company. Amcor Limited’s 2021 annual report highlights its efforts to promote diversity and inclusion, including the establishment of an inclusion and diversity council. Orora Limited’s annual report also notes the company’s commitment to diversity and inclusion, as well as its efforts to promote ethical business practices and compliance with relevant laws and regulations.
Overall, both Amcor Limited and Orora Limited have demonstrated a strong commitment to sustainability and CSR, with both companies taking proactive steps to reduce their environmental footprint and promote responsible business practices.
References
Amcor Annual Report, (2022). Strength Innovation Growth. [ONLINE]. Available at, https://assets.ctfassets.net/f7tuyt85vtoa/5zLv7sYNadeuq12za3Gdb7/f1c3b42ef99c0c8961872a9305b5eca3/Amcor_Annual_Report_2022.pdf .[Accessed on 28th April, 2023].
Amcor Sustainability Report, (2022). FACES OF SUSTAINABILITY (Sustainability Report 2022). [ONLINE]. Available at, https://assets.ctfassets.net/f7tuyt85vtoa/3xUMcwnCv4yUBsIlOLz3EE/655a028a95896ff00c764547da185a17/1_Amcor_Sustainability_Report_2022_Full_Report_WEB_SP.pdf .[Accessed on 28th April, 2023].
Amcor, (2022). FY22 Sustainability Report. [ONLINE].Available at, https://www.amcor.com/sustainability-report .[Accessed on 28th April, 2023].
CISION PR Newswire, (2022). Amcor reports strong fiscal 2022 financial results. Provides outlook for fiscal 2023. [ONLINE]. Available at, https://www.prnewswire.com/news-releases/amcor-reports-strong-fiscal-2022-financial-results-provides-outlook-for-fiscal-2023-301607946.html . [Accessed on 28th April, 2023].