Going Remains Tough For Amcor

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By Rudi Filapek-Vandyck

Things simply refuse to go going smoothly when it comes to the price of Amcor (AMC) shares. The past three trading day saw declines and the days before that were pretty much flat. All this despite brokers such as Austock issuing hopeful reports (see Austock Out On A Limb On Amcor, 20 October).

Yesterday, our market sources informed us, it was a profit warning by unlisted packaging company National Can Industries that cooled down investor enthusiasm on the day. Apparently management at National Can Industries had warned shareholders earnings in the first six months of fiscal 2007 are going to be 40% lower versus an earlier guidance for a flat result.

This morning Macquarie analysts are throwing in their five cents arguing the National Can Industries downgrade (and let’s face it: it is a serious one) reinforces the perception that tough operating conditions in Australasia remain in place. Macquarie adds it also suggests that conditions are getting worse with customers de-stocking.

Interestingly, Macquarie notes, Amcor is currently in the process of trying to sell its tin can food and aerosols business. Tough conditions may make management’s attempt harder to achieve (or drive the price down).

Macquarie rates Amcor Underperform. Three other leading experts in FN Arena’s database have a similar negative investment view. Five others stick to Neutral. JP Morgan still hasn’t reinitiated coverage on the stock.

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