Global packaging firm Amcor says the time is right to split its Australasia and Packaging Distribution (AAPD) business from Amcor's other operations.
Amcor said the demerger of AAPD into a separately listed company on the Australian Securities Exchange would enable both the new Amcor and the separated business to pursue their own strategies and growth plans.
The new Amcor will focus on making flexible and rigid plastic packaging and tobacco packaging mostly for overseas markets, while AAPD will focus on the fibre, glass and beverage can packaging markets in Australasia, plus packaging distribution in North America and Australia.
"Although the new Amcor and AAPD are both packaging companies, they are actually very different in terms of product segments and geographic focus," Amcor chief executive Ken MacKenzie said on Thursday.
He said Amcor had been transforming its operations - including AAPD - over the last eight years, abandoning some market segments, closing various manufacturing facilities, reducing the size of the workforce, and expanding into other areas.
"The reason (for the demerger) now is that it's the right time," Mr MacKenzie said.
"Those important transformation agendas are largely behind us."
More than $1 billion had been invested in AAPD over the past four years to support future profit growth.
Mr MacKenzie said AAPD's underlying earnings, which excludes one-off significant items, had been strong and broadly consistent over those four years despite the strong Australian dollar and rising costs.
AAPD has 26 large-scale plants, employing about 5,000 workers. Two-thirds of its sales are generated in Australasia and one-third from North America.
The demerger, which needs shareholder approval, is expected to be completed by December 2013.
Shares in Amcor were up 16 cents, or 1.51 per cent, at $10.75 at 1354 AEST.
AAPD made a pre-tax loss of $36.8 million in the first half of the 2012/13 financial year.
The result for AAPD included a $119.6 million before tax charge from restructuring expenses, which included $86.1 million of asset value writedowns.
Mr MacKenzie said details of AAPD's performance in the second half of the financial year would be revealed when Amcor releases its full year financial results on August 19.
But, he said, the new company would have well-capitalised businesses, strong market positions and excellent earnings growth.
"You'll see that it's a very attractive company going forward," Mr MacKenzie said.
The chairman of the new company will be current Amcor chairman Chris Roberts and the current president of AAPD, Nigel Garrard, will be appointed chief executive.
Amcor director Graeme Liebelt will be appointed chairman of the new Amcor.
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