AUSTRALIA

AMC AU
Price (at 07:10, 18 Sep 2013 GMT) Valuation 12-month target 12-month TSR Volatility Index GICS sector Market cap 30-day avg turnover Number shares on issue Investment fundamentals
Year end 30 Jun Revenue EBIT Reported profit Adjusted profit Gross cashflow CFPS CFPS growth PGCFPS PGCFPS rel EPS adj EPS adj growth PER adj PER rel Total DPS Total div yield Franking ROA ROE EV/EBITDA Net debt/equity P/BV

Outperform A$10.80
A$ A$ % 11.24 11.24 +8.3 Low Materials A$m 13,036 A$m 51.7 m 1,207

Amcor
Berry downgrade not a direct read-thru
Event
US packaging company Berry Plastics lowered Sept quarter outlook and now

- DCF (WACC 8.0%, beta 0.9, ERP 0.1%, RFR 0.1%, TGR 0.0%)

expects a 10% y/y decline for EBITDA. The company cited no material improvement in volumes which continue to track down lower y/y, similar to recent prior quarters. Note the last few quarters have had volumes down ~2% y/y. In addition, inventory reduction will cost the company $2-4m of EBITDA in negative fixed cost absorption.
As per recent result, AMC is seeing generally flat volumes in both US and

2013A 2014E 2015E 2016E m 12,425 14,253 15,175 15,974 m 1,134 1,335 1,460 1,557 m 601 824 911 978 m 690 824 911 978 m 1,193 1,344 1,440 1,514 98.9 111.4 119.3 125.5 % 3.7 12.6 7.1 5.1 x 10.9 9.7 9.0 8.6 x 1.04 1.14 1.19 1.22 57.2 68.3 75.5 81.1 % 9.0 19.5 10.5 7.4 x 18.9 15.8 14.3 13.3 x 1.14 1.11 1.12 1.12 40.0 45.0 47.5 50.0 % 3.7 4.2 4.4 4.6 % 0 0 0 0 % 9.5 10.4 11.0 11.4 % 20.0 22.4 23.5 23.7 x 10.6 9.3 8.7 8.2 % 107.2 99.7 91.3 79.7 x 3.6 3.5 3.3 3.1

Europe. Rigid Plastics is 25% of AMC sales, Flexibles 51% and 24% fibre/metal/glass. North America is 32% of sales and Western Europe 26%.
Berry Plastics is a North American plastic packaging manufacturer. It operates

through three segments: Rigid Packaging (56% of sales), Engineered Materials (28%) and Flexible Packaging (16%). The Rigid Packaging segment comprises Rigid Open Top and Rigid Closed Top, which includes sales containers, foodservice items, housewares, closures, overcaps, bottles, prescription containers and tubes. The Flexible Packaging segment consists of high barrier, multilayer film products as well as finished flexible packages such as printed bags and pouches.

Impact
Mix and end market differentials are important when assessing global peer

AMC AU vs ASX 100, & rec history

results. AMC is much more beverage-exposed in the US and doesn't have much food flexibles presence in the US (Europe is its big market). AMC's flexibles exposure is pharma/healthcare, which are very defensive and as per recent result, continuing to hold up well. Whilst not positive, we believe direct read through from Berry is limited.
On the Rigid Plastics side, AMC's business is mainly beverage-related vs

Berry's Rigid Packaging business which is broader in terms of exposure (food, beverage, general). It hasn't been a great US summer so there is likely to be some negative Sept Qtr volume impact for AMC given it was a hot summer last year (we saw this in the June quarter so likely to be some carryover into Q1).
Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.

Demerger in mid-December is the key catalyst over the next few months

Source: FactSet, Macquarie Research, September 2013 (all figures in AUD unless noted)

(AGM is 24 Oct). Please refer to our most recent research for more detail: Amcor Demerger of equals?

Earnings and target price revision

No change.

Price catalyst
12-month price target: A$11.24 based on a DCF methodology. Catalyst: Oct 24 AGM, Early Nov scheme docs 18 September 2013

Action and recommendation

Outperform, $11.24 TP.

Macquarie Securities (Australia) Limited

Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our website www.macquarie.com/disclosures.

Macquarie Private Wealth

Amcor

Am cor Lim ited Sales Revenue Growth Other Revenue Total Revenue EBITDA Margin - Depreciation EBITA - Amortisation EBIT Margin - Net Interest Exp Pre-tax Profit - Tax Expense Tax Rate (Ord) Net Profit + Net Abnormals + Net Extraordiaries IFRS adjustments - Minority Interests Reported Profit Profit Before Abnormals Adj Profit (abn and amort) Gross Cashflow EPS (adj) EPS Growth CFPS DPS Franking EFPOWA Segm ent Contributions Australasia and Packaging Distribution Flexibles Rigid Plastics Investments/Other Total EBIT EBIT m argins Australasia and Packaging Distribution Flexibles Rigid Plastics Total EBIT Cashflow Analysis EBITDA ch. In Working Capital Net Interest Paid Tax Paid Other Total Operating Cashflow Capex PPE Sale Proceeds Investments Movement Loans Movement Other Total Investing Cashflow Proceeds from Equity Issues Borrow ings Movement Dividends Paid Other Total Financing Cashflow Adjustments Net Cash Movem ent Balance Sheet Cash Other CA Fixed Assets Intangibles Other NCA Total Assets S/T Debt (bank) L/T Debt (bank) Other Liabilities Net Assets S/H Funds Min Interests Total Equity Net Debt/Equity ND:ND+E EBITDA: Int cover (x) EBIT Int Cover (x) RoE (%) RoA (%) A$:US$ A$:Euro Net debt Net debt to EBITDA Total debt to EBITDA

2010a 9,850 3% 114 9,964 1,214 12% 425 789 30 759 7.7% 183 576 148 26% 428 -226 0 0 19 183 409 409 697 35.0 -19% 60 29.5 0% 1,162 161 397 213 -12 759 5.8% 9.0% 8.3% 7.7% 1,214 -393 -183 -89 235 784 -502 26 -2,446 3 0 -2,918 1,573 1,021 -286 -5 2,303 0 170 267 3,279 4,801 1,836 1,128 11,310 1,379 1,933 3,875 4,124 4,068 56 4,124 74% 42% 6.6 4.1 10% 7% 0.880 0.635 3044 2.5 2.7

2011a 12,412 26% 156 12,568 1,514 12% 472 1043 40 1,003 8.1% 217 786 193 25% 594 -214 0 0 23 357 570 570 912 46.6 33% 74 35.0 0% 1,225 160 621 243 -20 1003 5.6% 9.9% 7.7% 8.1% 1,514 28 -206 -148 -402 786 -624 79 -324 -1 0 -870 24 543 -433 0 134 0 50 224 3,436 4,497 1,882 885 10,924 356 3,064 3,756 3,749 3,688 60 3,749 85% 46% 7.0 4.6 16% 9% 0.991 0.726 3195 2.1 2.3

2012a 12,193 -2% 174 12,367 1,557 13% 455 1102 40 1,061 8.7% 206 856 197 23.0% 659 -222 0 0 24 413 635 635 992 52.4 13% 82 37.0 0% 1,211 153 683 264 -39 1061 5.3% 11.3% 8.1% 8.7% 1,557 260 -206 -113 -458 1,040 -705 42 -115 2 0 -776 -188 507 -444 0 -125 0 140 358 3,371 4,668 2,000 939 11,335 918 2,996 4,041 3,380 3,291 89 3,380 105% 51.3% 7.6 5.2 20% 9% 1.032 0.772 3556 2.3 2.5

1H13a 6,035 -1% 111 6,146 768 13% 220 548 17 531 8.8% 100 431 97 22.5% 334 -84 0 0 12 238 322 322 484 26.7 7% 40 19.5 0% 1,206 83 345 123 -19 531 5.6% 11.1% 8.5% 8.8% 768 -161 -88 -88 -97 334 -261 80 -104 -1 0 -285 -41 196 -241 0 -86 0 -38 360 3,399 4,596 2,038 854 11,246 1,507 2,627 3,693 3,420 3,337 83 3,420 110% 52.5% 7.7 5.3 20% 9.4% 1.033 0.802 3774 2.5 2.7

2H13a 6,390 5% 102 6,492 842 13% 222 620 17 603 9.4% 120 483 99 20.6% 384 -5 0 0 16 362 368 368 651 30.5 11% 54 20.5 0% 1,207 67 397 156 -14 607 4.7% 12.1% 9.5% 9.5% 842 108 -131 -50 -57 713 -215 9 -97 -1 0 -304 -17 -84 -237 0 -339 0 70 395 3,803 4,883 2,301 1,040 12,421 1,185 3,178 4,358 3,701 3,607 94 3,701 107% 51.7% 7.0 5.0 21% 9.7% 0.998 0.766 3968 2.4 2.6

2013a 12,425 2% 213 12,638 1,610 13% 442 1168 34 1,134 9.1% 220 914 196 21.5% 717 -89 0 0 28 601 690 690 1,135 57.2 9.0% 94 40.0 0% 1,206 146 742 279 -33 1134 5.0% 11.6% 9.0% 9.1% 1,610 -53 -218 -138 -154 1,047 -476 90 -201 -2 0 -589 -59 112 -478 0 -425 0 32 395 3,803 4,883 2,301 1,040 12,421 1,185 3,178 4,358 3,701 3,607 94 3,701 107% 52% 7.3 5.2 19% 9.1% 1.016 0.784 3968 2.5 2.7

1H14e 6,969 15% 111 7,080 871 13% 228 643 17 626 9.0% 123 504 111 22.0% 393 0 0 0 13 380 380 380 636 31.5 18.0% 53 22.0 0% 1,207 95 407 141 -18 626 5.7% 11.2% 8.5% 9.0% 871 -205 -123 -99 -20 424 -238 0 0 0 0 -238 0 0 -247 0 -247 -6 -67 395 3,855 4,893 2,284 1,040 12,466 1,185 3,244 4,215 3,823 3,716 107 3,823 106% 51% 7.1 5.1 21% 10.1% 0.905 0.707 4034 2.3 2.5

2H14e 7,284 14% 102 7,386 957 13% 231 726 17 709 9.7% 121 587 129 22.0% 458 0 0 0 14 444 444 444 711 36.8 20.8% 59 23.0 0% 1,207 92 462 181 -27 709 5.9% 12.2% 9.4% 9.7% 957 95 -121 -111 -30 790 -246 0 0 0 0 -246 0 0 -265 0 -265 -117 161 395 4,520 4,908 2,267 1,040 13,130 1,185 3,083 4,976 3,886 3,765 121 3,886 100% 50% 7.9 5.8 24% 10.8% 0.890 0.696 3873 2.0 2.2

2014e 14,253 15% 213 14,466 1,828 13% 459 1369 34 1,335 9.4% 244 1,091 240 22.0% 851 0 0 0 27 824 824 824 1,347 68.3 19.5% 112 45.0 0% 1,207 187 870 323 -45 1335 5.8% 11.7% 9.0% 9.4% 1,828 -110 -244 -210 -50 1,215 -484 0 0 0 0 -484 0 0 -513 0 -513 -123 94 395 4,520 4,908 2,267 1,040 13,130 1,185 3,083 4,976 3,886 3,765 121 3,886 100% 50% 7.5 5.5 22% 10.2% 0.897 0.701 3873 2.1 2.3

2015e 15,175 6% 213 15,388 1,960 13% 466 1494 34 1,460 9.6% 240 1,220 281 23.0% 940 0 0 0 29 911 911 911 1,432 75.5 11% 119 48 0% 1,207 218 945 343 -46 1460 6.5% 11.8% 9.0% 9.6% 1,960 -127 -240 -260 -50 1,284 -516 0 0 0 0 -516 0 0 -555 0 -555 -115 98 395 4,839 4,958 2,232 1,040 13,464 1,185 2,986 5,157 4,137 3,988 150 4,137 91% 48% 8.2 6.1 23% 10.8% 0.865 0.660 3775 1.9 2.1

2016e 15,974 5% 213 16,186 2,063 13% 471 1591 34 1,557 9.7% 230 1,327 318 24.0% 1,008 0 0 0 30 978 978 978 1,504 81.1 7% 125 50 0% 1,207 225 1022 356 -47 1557 6.6% 11.9% 9.0% 9.7% 2,063 -41 -230 -298 -50 1,443 -531 0 0 0 0 -531 0 0 -585 0 -585 -94 232 395 5,083 5,018 2,198 1,040 13,734 1,185 2,753 5,348 4,448 4,269 180 4,448 80% 44% 8.9 6.8 23% 11.3% 0.857 0.622 3543 1.7 1.9

Source: Macquarie Research, September 2013

18 September 2013

Macquarie Private Wealth Important disclosures:

Recommendation definitions
Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie First South - South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 index return

Amcor
Volatility index definition*
This is calculated from the volatility of historical price movements. Very highhighest risk Stock should be expected to move up or down 60100% in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 4060% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 3040% in a year. Lowmedium stock should be expected to move up or down at least 2530% in a year. Low stock should be expected to move up or down at least 1525% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations

Financial definitions
All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards).

Recommendation proportions For quarter ending 30 June 2013

Outperform Neutral Underperform AU/NZ 49.80% 39.85% 10.35% Asia 57.68% 24.45% 17.87% RSA 48.05% 42.86% 9.09% USA 41.13% 54.70% 4.17% CA 61.75% 34.42% 3.83% EUR 47.10% (for US coverage by MCUSA, 8.12% of stocks followed are investment banking clients) 30.89% (for US coverage by MCUSA, 6.60% of stocks followed are investment banking clients) 22.01% (for US coverage by MCUSA, 0.00% of stocks followed are investment banking clients)

Company Specific Disclosures: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Amcor Limited's equity securities. Risk Disclosure: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerrings by competitors.The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets.The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures. Analyst Certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN 94 122 169 279, AFSL No. 318062) (MGL) and its related entities (the Macquarie Group) and has taken reasonable c are to achieve and maintain independence and objectivity in making any recommendations. General Disclosure: This research has been issued by Macquarie Securities (Australia) Limited (ABN 58 002 832 126, AFSL No. 238947) a Participant of the Australian Securities Exchange (ASX) and Chi-X Australia Pty Limited. 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18 September 2013