“We delivered strong earnings and operating cash flow improvement in 2018. Our Agility plan to fix, strengthen, and grow Bemis is progressing well and benefiting our business,” says William F. Austen, Bemis president/CEO. “All operating segments performed in-line with our expectations and met our Agility objectives during 2018.
"In our US business, we focused on improving operations and laying the foundation for long-term growth through our Agile Lane initiative to penetrate short-run business. Our teams in the US worked tirelessly to deliver our financial plans in light of both known and incremental headwinds during the year.
"In our Latin American business, we continued to execute cost improvements in light of the challenging economic environment in Brazil and delivered 100 basis points of margin expansion during the year. In our Rest of World business, we delivered 200 basis points of operating profit improvement in 2018, driven by solid operational performance across the segment and strong organic sales growth in our healthcare packaging business.”
As part of its improvement plan called “Agility” to fix, strengthen, and grow its business, the fix aspect of this plan includes a restructuring and cost savings target of $65 million pre-tax by the end of 2019. Agility-related cost savings were approximately $9 million during the fourth quarter of 2018, for a full year total of $35 million, in line with Bemis expectations. Additionally, in relation to the strengthen and grow aspects of Agility, the Company reached its 2018 internal targets for growth of short-run business.
PROPOSED COMBINATION WITH AMCOR
On August 6, 2018, Bemis announced a plan for an all-stock combination with Amcor to create the global leader in consumer packaging with the footprint, scale, talent, and capabilities to better serve customers around the world, drive significant value for shareholders, create enhanced opportunities for employees, and deliver the most sustainable innovations for the environment.
Austen says, “We believe combining these two organizations will drive significant value for shareholders, employees, and customers over the long-term. Bemis shareholders will have the opportunity to benefit from the expected increased dividend, which nearly doubles from Bemis’ current dividend, and the value creation driven from not only the $180 million of cost synergies identified as part of the transaction but also additional potential revenue synergies.
“As announced in our press release last week, we anticipate the transaction will close in Q2 2019. Over the past several months, our integration planning teams have made great progress to ensure the framework is set to support a smooth transition on the first day of the new Amcor, as well as the days and months that follow. For Bemis, this is the next exciting chapter in our evolution. We look forward to creating the global leader in consumer packaging through this transaction.”
During Q4 and FY 2018, Bemis recorded approximately $4 million and $14 million, respectively, of costs related to the planned transaction with Amcor.