The Amcor (AMC) result is inline, and guidance matches street estimates for the full year.

It remains a decent inflation hedge (pass-throughs to end customer) against oil/energy, and trades at 15x.

Not bad for a reasonably low vol, growing, player of scale (and plastics packaging is all about size, it’s where the competitive advantage comes in).


AMC have noted that demand is slowing, and when asked about “why not lower your guidance” at the Q&A session, said it was simply because they were unsure about volumes, but felt that cost out could get them there.

Near term, that is obviously a wobbly answer and clearly a candidate for guidance revision (a downgrade).

It is very difficult to know what to do in that situation. The stock is on 15x, which is not particularly high, and, given we worry that global growth could slow given rate hikes, aren’t sure that other stocks have less earnings risk.

AMC also pointed to the fact that weakness stemmed from places like China, over October, November, December. But China reopened, and it is possible that China surprises to the upside. AMC noted that January was better than October-December.

So, it could disappoint, but, we would likely hold through a downgrade and add more, on material weakness.

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