Amcor (ASX:AMC): This Packaging Giant Is Under Pressure, But Is the Yield Worth the Wait?

Amcor (ASX:AMC) is celebrating its 100th anniversary later this year, but it would seem there’s little else to celebrate right now. Perhaps the dividend yield, but of course the high yield is more because of the lower share price than because of the higher dividend.

It is true that few names on the ASX carry the industrial pedigree of Amcor, it has spent several decades evolving from a colonial paper mill into one of the world’s dominant packaging businesses. Today it operates across more than 40 countries, employs roughly 77,000 people, and generates around US$23bn. So what’s gone wrong, and is there a case for buying in now?

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Amcor’s history

Amcor’s story begins with Samuel Ramsden, a Yorkshire stonemason who arrived in Melbourne in the 1860s and established Victoria’s first paper mill on the banks of the Yarra River. That enterprise grew into Australian Paper Manufacturers (APM), which was formally incorporated in 1926 and spent decades as the dominant force in the nation’s pulp, paper, and packaging markets.

The transformation into a modern packaging conglomerate began in earnest in the 1970s and 1980s, when the company diversified aggressively beyond paper. In 1986, APM rebranded as Amcor to reflect its broadened ambitions. In 2000, Amcor demerged its paper business entirely, committing fully to packaging, and embarked on a decade of significant global expansion. The 2002 acquisition of Schmalbach-Lubeca’s rigid packaging and closures business (at a cost of roughly US$2.9bn) made Amcor the world’s largest manufacturer of PET containers virtually overnight.

Further milestones followed. The 2010 acquisition of Alcan Packaging from Rio Tinto transformed the company’s flexible packaging capability globally. The 2019 acquisition of Bemis, an American packaging specialist, significantly deepened Amcor’s North American presence. And in its most recent and largest strategic move, Amcor completed an all-stock merger with Berry Global in April 2025, a transformational deal that created the global leader in consumer and healthcare packaging.

The Berry Global Merger: Transformational — But Complex

The combination with Berry Global, completed on April 30, 2025, ahead of its original schedule, fundamentally reshaped Amcor. The merged entity operates more than 400 locations across over 40 countries and now spans flexible packaging, rigid packaging, cartons, and closures. Management has identified US$650m in total pre-tax synergies by the end of FY28, with US$260m expected to flow through in FY26 alone, representing roughly 12% EPS accretion from synergies before any underlying business growth. Annual free cash flow is expected to exceed US$3bn by FY28 once full run-rate synergies are achieved.

CEO Peter Konieczny has been direct about the opportunity: the combination creates scale advantages in procurement, manufacturing footprint rationalisation, and innovation that neither company could achieve independently. The early integration results have been encouraging. Amcor’s first-quarter synergies came in at US$38m, at the upper end of the expected range, and second-quarter synergies of US$55m maintained that trajectory.
The catch? The merger also added meaningful debt to the balance sheet. Leverage currently sits at approximately 3.5x, which narrows the company’s financial flexibility and introduces execution risk that the market has not ignored.

The Reverse Stock Split: A Cosmetic Reset

In January 2026, Amcor completed a 1-for-5 reverse stock split, effective January 15. Approved by shareholders at the November 2025 AGM, the move consolidated every five ordinary shares (and every five CDIs on the ASX) into one. Outstanding shares were reduced from approximately 2.3 billion to around 461 million.

Reverse splits are often viewed with scepticism: they can signal that a company is trying to dress up a falling share price rather than address the underlying causes. In Amcor’s case, the rationale was primarily institutional: a higher per-share price improves comparability with global packaging peers and brings the stock into a range more compatible with certain institutional mandates. It changes nothing about the fundamental value of the company, but it has reset the optics and per-share metrics on which future results will be reported.

Recent Results Are Better Than the Company’s Share Price Suggests

Amcor’s first-half FY26 results (the six months to December 31, 2025) were materially stronger than the share price trajectory implies. Net sales rose 70% to US$11.2bn, driven predominantly by the Berry acquisition. Adjusted EBITDA climbed 89% to US$1.74bn, with margins expanding to 15.5% from 13.9%. Adjusted EPS for the half came in at US$1.83, up 14%, and the company reaffirmed full-year FY26 guidance of US$4.00–$4.15 adjusted EPS — representing 12–17% constant currency growth. Free cash flow guidance of US$1.8–1.9bn was also reaffirmed.

The volume environment remains challenging. Consumer demand across Amcor’s core food, beverage, and personal care end markets has been soft, with customers managing inventory carefully rather than pulling demand forward. Currency headwinds have also weighed on the translation of USD earnings for ASX investors. These are not company-specific problems — they reflect a broader global packaging cycle — but they explain why the share price has underperformed the ASX All Ordinaries by nearly 10% over the past six months and currently trades below its 200-day moving average.

The Dividend: Real, Growing, But Not Without Risk

The income case for Amcor is tangible. The company has grown its dividend for seven consecutive years, and the current annual dividend of US$2.60 per share translates to a yield of around 5.5% at current prices. The quarterly dividend of US$0.65 was declared alongside the H1 FY26 results, with a February 25 ex-dividend date and payment scheduled for today (March 17, 2026).

The caveat is the payout ratio, which sits above 100% on a GAAP basis, partly a function of merger-related costs running through earnings. Management’s conviction in the dividend is clear, but investors relying on it as a pure yield play should be aware that the free cash flow underpinning it, while substantial, is also supporting integration costs and debt servicing simultaneously.

Is AMC a Buy?

The bull case for Amcor is reasonably straightforward. Amcor trades at approximately 10 times earnings on the ASX (well below its long-term average) with a dividend yield above 5.5%, a growing synergy runway, and analyst consensus targets roughly 24% above the current share price. The Berry merger, despite adding complexity, positions the company to deliver earnings and cash flow growth that the current price doesn’t appear to credit.
The risks are also clear: elevated leverage, a soft volume cycle, ongoing currency translation drag for Australian investors, and the inherent execution complexity of integrating a business of Berry’s scale. A reverse stock split that followed years of share price underperformance does not inspire confidence in isolation.

For patient, income-oriented investors who believe in the global packaging thematic and Amcor’s ability to extract its identified synergies, the current price may well represent a reasonable entry point. For those seeking near-term capital growth, the macro headwinds may mean the patience required is longer than many would like.

Amcor is not broken, but it is not firing on all cylinders either. The yield is real, the strategic repositioning is compelling, and the valuation is undemanding. The question is simply whether you are willing to wait for the rest of the market to agree.