AMCR — ANNUAL 2026 Financial Report Analysis

Amcor's first full year with Berry: sales up 57%, but almost none of it organic

Amcor plc (NYSE: AMCR) closed fiscal year 2026 on June 30, 2026 and filed its Form 10-K on August 14, 2026 (accession 0001748790-26-000022). Net sales of $23,506 million were up 57% from $15,009 million a year earlier — the single largest year-over-year jump in the company's history as a US-listed filer, and almost entirely a mechanical consequence of the April 30, 2025 merger with Berry Global rather than anything the underlying business did.

The 10-K decomposes it explicitly. Of the $8,497 million increase, roughly $7,864 million (52 points of the 57%) came from the Berry merger net of divestments, about $649 million from favorable currency movements, and about $240 million from passing higher raw-material costs through to customers — a mechanical pass-through that raises both sales and costs and adds nothing to profit. Strip all three out and what's left is a decline of roughly $260 million, or about 2%, "primarily reflecting lower sales volume."

That gap between the headline and the underlying is the story of the year.

Headline numbers

Operating margin — the share of each sales dollar left after the cost of making and selling the product, before interest and tax. Adjusted EBIT strips out items Amcor treats as non-recurring; the largest by far is amortization of acquired intangibles, discussed below.

Note the two very different EPS growth rates in that table. GAAP diluted EPS rose 49%; adjusted diluted EPS rose 13%. The difference isn't noise — it's what happens when a company laps a prior year that contained a large slug of one-time deal costs. FY2025 GAAP earnings were depressed by $169 million of transaction costs, $133 million of inventory step-up amortization (a purchase-accounting charge that inflates the cost of the acquired company's inventory as it's sold in the first months after closing) and $41 million of accelerated merger compensation. FY2026 had far less of that, so GAAP earnings rebounded off an artificially low base. Adjusted EPS at +13% is the cleaner read on what the combined company actually earned per share.

Two segments, two completely different comparisons

Amcor reports Global Flexible Packaging Solutions (films, pouches, wraps) and Global Rigid Packaging Solutions (bottles, containers, closures). Berry's weight fell overwhelmingly on the second one, which makes the two YoY comparisons almost non-comparable with each other. Note also that effective January 1, 2026, certain Latin American flexible operations were moved into the Rigid segment and prior periods were recast accordingly.

Flexibles added $2.24 billion of acquired sales and $333 million of currency benefit; the residual was a ~$50 million decline, with volumes down about 1% offset partly by favorable price/mix. Its adjusted EBIT margin was exactly flat at 13.9% — the segment grew profit dollars in line with sales, no more. Within that, the 10-K attributes the 8% underlying EBIT growth to "synergy benefits from the Merger, operating cost performance and productivity benefits of approximately 12%, partially offset by lower volumes of approximately 3%, and unfavorable impacts from price/mix of approximately 1%." So cost work is carrying the segment while volume and pricing both subtract.

Rigid is where the reported numbers look spectacular and where they need the most care. Sales more than doubled because $5.62 billion of Berry revenue landed in a segment that previously did $4.94 billion — this is a different business than a year ago, not a growing one. Underlying sales fell about 4% (volumes −3%, price/mix −1%). The margin expansion from 8.8% to 11.0% is genuine but is substantially a mix effect: the acquired Berry business carries structurally higher margins than legacy Amcor Rigid, so blending it in lifts the reported average without any legacy operation improving. Amcor says as much, describing the 220 basis points as "reflecting the improved quality of the combined business." Separately, the 15% underlying EBIT increase does reflect real work — "synergy benefits from the Merger and operating cost performance of approximately 26%, partially offset by the negative effect of approximately 11% from unfavorable volumes and lower earnings in non-core businesses."

Synergies are running ahead of plan — and they are the entire earnings story

Amcor realized approximately $240 million of Berry synergy benefits in FY2026 against a target of roughly $530 million of pre-tax cost synergies by June 30, 2028, plus $60 million of annual financial synergies and $60 million of pre-tax earnings from growth synergies. CEO Peter Konieczny said in the August 12 earnings release that "synergy realization came in ahead of plan." In the June quarter alone synergies contributed about $100 million of EBIT.

Put that next to the organic picture: consolidated volumes and price/mix together took roughly 2% out of sales, and the residual EBIT growth in both segments is described as cost/productivity/synergy benefits partially offset by volume declines. Cost extraction is not supplementing growth at Amcor right now; it is substituting for it.

The cost of getting it: in FY2026 Amcor incurred $104 million in employee-related expenses, $26 million in other restructuring, $45 million in restructuring-related expenses and $19 million in fixed-asset items under the "Berry Plan," plus $51 million of integration activity — against a total estimated Berry Plan pre-tax cash cost of $280 million net, with completion targeted for June 30, 2028. Net cash spend on restructuring and integration was about $157 million in the year.

The $1.64 gap between GAAP and adjusted EPS

Adjusted diluted EPS of $4.02 sits $1.64 above GAAP diluted EPS of $2.38. The reconciliation in the 10-K shows where it comes from, and the composition matters for how much weight to put on the adjusted figure:

The single largest item, $558 million of acquired-intangible amortization, is non-cash — it is the accounting write-down of customer relationships and technology Amcor paid for in the Berry deal, spread over years — so excluding it from a cash-earnings view is defensible, and Amcor notes plainly that the revenue from those acquired assets stays in adjusted EBIT. The second-largest, $266 million of restructuring and integration, is cash, and it is now in its second consecutive year at elevated levels with two more years of Berry Plan spend budgeted. Treating it as "unusual" gets harder each year it recurs.

Balance sheet: leverage is the binding constraint

Net debt of $12.9 billion against adjusted EBITDA of $3,673 million is roughly 3.5x leverage — well inside the bank facility covenant ceiling of 3.9x (stepping to 4.25x for twelve months after a large acquisition), and Amcor confirms compliance with all covenants, but not comfortable. Interest expense rose $280 million to $676 million on the merger financing and assumed Berry debt, consuming 36% of GAAP operating income.

Two details worth flagging. First, goodwill of $12,075 million now exceeds total shareholders' equity of $11,801 million — tangible book value is negative, and the auditor identified the goodwill impairment assessment of the Rigid reporting unit as a critical audit matter, requiring specialist review of management's discount rate, market multiple and revenue growth assumptions. No impairment was recorded in FY2026 or FY2025, but that reporting unit's carrying value is sensitive to exactly the volume trends currently going the wrong way.

Second, the deleveraging in FY2026 was funded by asset sales, not by retained earnings. Free cash flow was $1,303 million; dividends paid were $1,195 million, leaving about $108 million of retained cash. Amcor also collected $298 million of cash proceeds from selling four businesses under its strategic review, plus an estimated $79 million from its ePac stake. Net debt fell $374 million. Run the arithmetic and essentially the entire reduction is explained by divestiture proceeds. Operating cash flow itself was strong — $2,151 million, up $761 million — but capital expenditure rose to $922 million from $580 million (Rigid capex more than doubled, $458m vs $213m), and the dividend absorbed 92% of what was left. There was no share repurchase program at all in fiscal 2026; the only share purchases were $29 million to satisfy vesting of employee awards.

The board nonetheless raised the quarterly dividend to 65.0 cents per share (from 63.75 cents on a comparable post-split basis). Total dividends paid rose to $1,195 million from $845 million — a 41% increase driven by the 46% larger share count, not by a large per-share raise. Against GAAP net income of $1,106 million, the dividend was paid out at more than 100% of reported earnings.

Takeaway: Amcor's 57% sales growth and 116% net income growth are merger arithmetic, not performance. What the underlying business did in FY2026 was shrink about 2% on volume, with both segments reporting volume declines and Flexibles' margin exactly flat. The entire profit improvement came from Berry synergies and cost work — $240 million realized against a $530 million target — and the dividend plus capex consumed essentially all of the resulting cash, leaving asset sales to do the deleveraging. The integration is delivering on schedule; the demand environment underneath it is not cooperating.

Housekeeping that affects the numbers you see

Three changes make FY2026 comparisons awkward and will make FY2027 comparisons worse:

• 1-for-5 reverse stock split, effective January 14, 2026. All per-share figures above, current and prior year, are restated for it. A quoted pre-split EPS or dividend from before that date is five times too small relative to these.
• Fiscal year end moving from June 30 to December 31, approved by the board in May 2026 and effective for the period beginning July 1, 2026. There will be a six-month transition period from July 1 to December 31, 2026, then calendar-year reporting after that.
• Segment recast, with certain Latin American flexible operations moved from Flexibles to Rigid effective January 1, 2026, prior periods restated.

Guidance and trajectory

For the six-month transition period ending December 31, 2026, management guides to adjusted diluted EPS of approximately $1.80 to $1.90 and leverage of 3.5x–3.6x at December 31, 2026. Amcor explicitly notes the outlook excludes the impact of any portfolio actions not yet announced, and declined to provide GAAP reconciliations on the basis that the components aren't yet known.

Two things stand out in that guidance. The leverage guide implies no deleveraging over the next six months — 3.5x–3.6x at December against roughly 3.5x today, in a period that will carry continued Berry Plan cash costs and a dividend that already consumes most of free cash flow. Any meaningful reduction in net debt therefore has to come from the strategic review, not from operations.

That review is the second thing. Amcor has identified businesses with combined sales of $2.5 billion — including its North American Beverage business — as less aligned with its target growth, margin and scale profile, with possible actions ranging from restructuring to joint ventures to outright sale. It sold four of them in FY2026 for $298 million. There is no stated deadline. A $2.5 billion revenue disposal program against $23.5 billion of sales is material enough that the shape of Amcor's FY2027 income statement is not yet determined by anything in this 10-K.

My read on trajectory. The bull case is arithmetic and reasonably solid: roughly $290 million of the $530 million synergy target is still unrealized, most of it scheduled to land by June 2028, and that flows to EBIT without needing a single extra unit sold. On the adjusted EBIT base of $2,813 million that is a meaningful uplift, and June-quarter volumes did turn — up about 0.5% versus estimated combined legacy Amcor plus legacy Berry volumes, the first positive comparison in some time, led by pet food and protein in Flexibles and foodservice and beauty in Rigid.

The bear case is that a company deriving its entire earnings growth from cost extraction has a finite runway, and Amcor's is now visible: it ends around June 2028. Meanwhile the 10-K's own market commentary is unusually blunt — "softer consumer demand and customer order volatility," "volatility and changes in U.S. domestic and global tariff frameworks," and Middle East conflict that "resulted in higher energy prices beginning in the third quarter" with "an unprecedented impact on the cost of certain raw materials." Price/mix was negative in both segments in the June quarter, which in a packaging business facing input-cost inflation is the wrong direction: it means Amcor is recovering raw-material costs through contractual pass-throughs (which add revenue but no margin) rather than winning genuine price.

The GAAP tax rate of 14.1% is also worth watching. It fell from 20.8% on "favorable return-to-provision adjustments," valuation allowance releases and changes in unrecognized tax benefits — discrete items, by definition not repeatable. The adjusted effective rate of 16.5% is the more durable number, and it too is low enough that normalization would be a headwind rather than a help.

The verdict for the next 12–18 months: earnings should keep growing on synergy delivery regardless of demand, but the quality of that growth declines as the non-cash amortization add-back and the recurring restructuring add-back grow relative to it. The real inflection depends on whether volumes hold the modest positive turn seen in the June quarter — and on what Amcor actually does with the $2.5 billion of businesses it has put under review, since that is the only lever in sight that changes the leverage picture.

Source: Amcor plc Form 10-K for the fiscal year ended June 30, 2026, filed with the SEC on August 14, 2026 (accession 0001748790-26-000022), and the fourth-quarter/full-year fiscal 2026 earnings release furnished as Exhibit 99.1 to the Form 8-K dated August 12, 2026 (accession 0001748790-26-000020). Adjusted EBIT, adjusted EBITDA, adjusted net income, adjusted EPS, free cash flow and net debt are non-GAAP measures as defined and reconciled by Amcor in those filings.