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What changed in Amcor's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Amcor's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+347 added−347 removedSource: 10-K (2023-08-17) vs 10-K (2022-08-18)

Top changes in Amcor's 2023 10-K

347 paragraphs added · 347 removed · 281 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeDrawing on unrivaled heritage in design, science and manufacturing, our more than 1,000 research and development ("R&D") professionals and engineers are constantly innovating new materials, formats, and technologies. We collaborate with like-minded partners, including customers and suppliers, in pursuit of innovative solutions to address some of the world’s most urgent challenges, including increasing recycling and reuse and protecting our planet.
Biggest changeWe solve packaging challenges, developing differentiated products, services, and processes to protect our customers' products and fulfil the needs of the consumers who rely on them. Drawing on unrivaled heritage in design, science, and manufacturing, our more than 1,000 R&D professionals and engineers are constantly innovating across new materials, formats, functions, and technologies.
However, we cannot predict with certainty that we will not, in the future, incur liability with respect to noncompliance with health and safety laws, environmental laws and regulations due to contamination of sites formerly or currently owned or 8 operated by us (including contamination caused by prior owners and operators of such sites) or the off-site disposal of regulated materials, or other broad government regulations which could be significant.
However, we cannot predict with certainty that we will not, in the future, incur liability with respect to noncompliance with health and safety laws, environmental laws and regulations due to contamination of sites formerly or currently owned or operated by us (including contamination caused by prior owners and operators of such sites) or the off-site disposal of regulated materials, or other broad government regulations which could be significant.
Areas of competition include service, innovation, quality, and price. Competitors include AptarGroup, Inc., Ball Corporation, Berry Global Group, Inc, CCL Industries Inc., Crown Holdings, Inc., Graphic Packaging Holding Company, Huhtamaki Oyj, International Paper Company, Mayr-Melnhof Karton AG, O-I Glass, Inc., Sealed Air Corporation, Silgan Holdings Inc., Sonoco Products Company, and WestRock Company, and a variety of privately held companies.
Areas of competition include service, sustainability, innovation, quality, and price. Competitors include AptarGroup, Inc., Ball Corporation, Berry Global Group, Inc, CCL Industries Inc., Crown Holdings, Inc., Graphic Packaging Holding Company, Huhtamaki Oyj, International Paper Company, Mayr-Melnhof Karton AG, O-I Glass, Inc., Sealed Air Corporation, Silgan Holdings Inc., Sonoco Products Company, and WestRock Company, and a variety of privately held companies.
In January 2022, we further increased our efforts by committing to science-based targets to reduce greenhouse gas emissions and achieve net zero emissions by 2050. These new commitments have been recognized by the Science Based Targets initiative (SBTi) and build on years of progress under our EnviroAction program.
In January 2022, we further increased our efforts by committing to set science-based targets to reduce greenhouse gas emissions and achieve net zero emissions by 2050. These new commitments have been recognized by the Science Based Targets initiative (SBTi) and build on years of progress under our EnviroAction program.
Raw Materials Polymer resins and films, paper, inks, adhesives, aluminum, and chemicals constitute the major raw materials we use. These are purchased from a variety of global industry sources, and we are not significantly dependent on any one supplier for our raw materials.
Raw Materials Polymer resins and films, paper, inks, solvents, adhesives, aluminum, and chemicals constitute the major raw materials we use. These are purchased from a variety of global industry sources, and we are not significantly dependent on any one supplier for our raw materials.
These laws and regulations pertain to employee health and safety, the discharge of certain materials into the environment, handling and disposition of waste, cleanup of contaminated soil and ground water, other rules to control pollution and manage natural resources, and other government regulations.
These laws and regulations pertain to employee health 9 and safety, the discharge of certain materials into the environment, handling and disposition of waste, cleanup of contaminated soil and ground water, other rules to control pollution and manage natural resources, and other government regulations.
You may also obtain these reports by writing to us, Attention: Investor Relations, Amcor plc, Level 11, 60 City Road, Southbank, VIC, 3006, Australia. We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K. 12
You may also obtain these reports by writing to us, Attention: Investor Relations, Amcor plc, Level 11, 60 City Road, Southbank, VIC, 3006, Australia. We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K. 13
We make available free of charge (other than an investor’s own Internet access charges) through the Investor Relations section of our website (http://www.amcor.com/investors), under "SEC Filings," our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make available free of charge (other than an investor’s own Internet access charges) through the Investor Relations section of our website (http://www.amcor.com/investors), under "Financial Information" and then "SEC Filings," our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Sustainability and Innovation We believe there will always be a role for the primary packaging we produce to preserve food, beverages, and healthcare products, protect consumers, and promote brands. Consumers also want cost effective, convenient, and easy to use packaging with a reduced environmental footprint and a responsible end of life solution.
We believe there will always be a role for the primary packaging we produce to preserve food, beverages, and healthcare products, protect consumers, and promote brands. Consumers also want cost effective, convenient, and easy to use packaging with a reduced environmental footprint and a responsible end of life solution.
We provide targeted training across the globe to reinforce our commitment to ethics and drive adherence to the national laws in each country in which we operate. 11 Information about our Executive Officers The following sets forth the name, age, and business experience for at least the last five years of our executive officers.
We provide targeted training across the globe to reinforce our commitment to ethics and drive adherence to the national laws in each country in which we operate. 12 Information about our Executive Officers The following sets forth the name, age, and business experience for at least the last five years of our executive officers.
Our employees are expected to act with integrity and objectivity and to always strive to enhance our reputation and performance. We maintain a Code of Business Conduct and Ethics Policy which is signed by every Amcor employee and provides the Company's framework for making ethical business decisions.
Our employees are expected to act with integrity and objectivity and to always strive to enhance our reputation and performance. We maintain a Code of Business Conduct and Ethics Policy which is signed by every Amcor employee and provides our framework for making ethical business decisions.
Name (Age) Positions Held Period the Position was Held Ronald Delia (51) Managing Director and Chief Executive Officer 2015 to present Executive VP, Finance and Chief Financial Officer 2011 to 2015 VP and General Manager, Amcor Rigid Packaging Latin America 2008 to 2011 Michael Casamento (51) Executive VP, Finance and Chief Financial Officer 2015 to present VP, Corporate Finance 2014 to 2015 Susana Suarez Gonzalez (53) Executive VP and Chief Human Resources Officer 2022 to present Executive VP, Chief Human Resources and Diversity & Inclusion Officer, International Flavors and Fragrances 2016 to 2022 Deborah Rasin (55) Executive VP and General Counsel 2022 to present Senior VP, Chief Legal Officer and Secretary, Hill-Rom Holdings 2016 to 2022 Eric Roegner (52) President, Amcor Rigid Packaging 2018 to present Executive Leadership Roles, Arconic, Inc.
Name (Age) Positions Held Period the Position was Held Ronald Delia (52) Managing Director and Chief Executive Officer 2015 to present Executive VP, Finance and Chief Financial Officer 2011 to 2015 VP and General Manager, Amcor Rigid Packaging Latin America 2008 to 2011 Michael Casamento (52) Executive VP, Finance and Chief Financial Officer 2015 to present VP, Corporate Finance 2014 to 2015 Susana Suarez Gonzalez (54) Executive VP and Chief Human Resources Officer 2022 to present Executive VP, Chief Human Resources and Diversity & Inclusion Officer, International Flavors and Fragrances 2016 to 2022 Deborah Rasin (56) Executive VP and General Counsel 2022 to present Senior VP, Chief Legal Officer and Secretary, Hill-Rom Holdings 2016 to 2022 Eric Roegner (53) President, Amcor Rigid Packaging 2018 to present Executive Leadership Roles, Arconic, Inc.
(f/k/a Alcoa Inc.) 2006 to 2018 Fred Stephan (57) President, Amcor Flexibles North America 2019 to present President, Bemis North America 2017 to 2019 Senior VP and General Manager of the Insulation Systems - Johns Manville 2011 to 2017 Ian Wilson (64) Executive VP, Strategy and Development 2000 to present Michael Zacka (55) President, Amcor Flexibles Europe, Middle East and Africa 2021 to present President, Amcor Flexibles Asia Pacific and Chief Commercial Officer 2017 to 2021 Tetra Pak Global Leadership Team 1996 to 2017 Available Information We are a large accelerated filer (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rule 12b-2) and we are also an electronic filer.
(f/k/a Alcoa Inc.) 2006 to 2018 Fred Stephan (58) President, Amcor Flexibles North America 2019 to present President, Bemis North America 2017 to 2019 Senior VP and General Manager of the Insulation Systems - Johns Manville 2011 to 2017 Ian Wilson (65) Executive VP, Strategy and Development 2000 to present Michael Zacka (56) President, Amcor Flexibles Europe, Middle East and Africa 2021 to present President, Amcor Flexibles Asia Pacific and Chief Commercial Officer 2017 to 2021 Tetra Pak Global Leadership Team 1996 to 2017 Available Information We are a large accelerated filer (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rule 12b-2) and we are also an electronic filer.
As of June 30, 2022, approximately 6% of our employees were working under expired contracts and approximately 21% were covered under collective bargaining agreements that expire within one year. Health and Safety Safety is a core value at Amcor. We take care of ourselves and each other, so everyone returns home safely every day.
As of June 30, 2023, approximately 3% of our employees were working under expired contracts and approximately 17% were covered under collective bargaining agreements that expire within one year. Health and Safety Safety is a core value at Amcor. We take care of ourselves and each other, so everyone returns home safely every day.
Rigid Packaging Segment Our Rigid Packaging Segment manufactures rigid packaging containers and related products in the Americas. As of June 30, 2022, the Rigid Packaging Segment employed approximately 6,000 employees at 52 significant manufacturing and support facilities in 11 countries. In fiscal year 2022, Rigid Packaging accounted for approximately 23% of consolidated net sales.
Rigid Packaging Segment Our Rigid Packaging Segment manufactures rigid packaging containers and related products in the Americas. As of June 30, 2023, the Rigid Packaging Segment employed approximately 5,000 employees at 52 significant manufacturing and support facilities in 11 countries. In fiscal year 2023, Rigid Packaging accounted for approximately 24% of consolidated net sales.
We have identified a clear path to provide food, beverages, and healthcare products to people around the world in a more sustainable way, and meet our sustainability ambitions, and those of our customers by focusing on what we believe are the three elements of responsible packaging: product innovation, consumer participation, and infrastructure development.
We have identified a clear path to provide food, beverages, and healthcare products to people around the world in a more sustainable way and meet our sustainability ambitions and those of our customers, by focusing on three key elements of responsible packaging: product innovation, consumer participation, and waste management infrastructure.
As of June 30, 2022, we had approximately 44,000 employees, including part-time and temporary workers, worldwide, with approximately 30% located in North America, 30% located in Europe, 20% located in Latin America, and 20% located in the Asia Pacific region. Collective bargaining agreements cover approximately 46% of our workforce.
As of June 30, 2023, we had approximately 41,000 employees, including part-time and temporary workers, worldwide, with approximately 30% located in North America, 30% located in Europe, 20% located in Latin America, and 20% located in the Asia Pacific region. Collective bargaining agreements cover approximately 45% of our workforce.
With approximately 37,000 employees at 169 significant manufacturing and support facilities in 39 countries as of June 30, 2022, the Flexibles Segment is one of the world's largest suppliers of plastic, aluminum, and fiber based flexible packaging. In fiscal year 2022, Flexibles accounted for approximately 77% of consolidated net sales.
With approximately 35,000 employees at 166 significant manufacturing and support facilities in 37 countries as of June 30, 2023, the Flexibles Segment is one of the world's largest suppliers of plastic, aluminum, and fiber based flexible packaging. In fiscal year 2023, Flexibles accounted for approximately 76% of consolidated net sales.
We also strive to continuously reduce the environmental impacts of our operations and, for more than a decade, our EnviroAction program has helped us significantly improve how we manage energy, water, and waste in every one of our locations.
We believe that our environmental footprint goes well beyond the products we create. We also strive to continuously reduce the environmental impacts of our operations. For more than a decade, our EnviroAction program has helped us significantly improve how we manage energy, water, and waste in every one of our manufacturing locations.
We believe we are winning for our people when they feel safe, engaged, and are developing as part of a high-performing, global team. We strive to build an outperformance culture in which we consistently deliver results and strive to surpass expectations. At Amcor, we are stronger because of the diverse strengths, styles, cultures, and experiences of our people.
Our people are core to the achievement of our aspiration. We believe we are winning for our people when they feel safe, engaged, and are developing as part of a high-performing, global team. We strive to build an outperformance culture in which we consistently deliver results and strive to surpass expectations.
In addition, these laws and regulations are constantly changing, and we cannot always anticipate these changes. Refer to Note 20, "Contingencies and Legal Proceedings," of the notes to consolidated financial statements for information about legal proceedings. For a more detailed description of the various laws and regulations that affect our business, see Item 1A.
In addition, these laws and regulations are constantly changing, and we cannot always anticipate these changes. Refer to Note 20, "Contingencies and Legal Proceedings," of the notes to consolidated financial statements for information about legal proceedings.
While persistent industry-wide shortages of certain raw materials have continued to occur since the second half of fiscal 2021, we have been able to manage supply disruptions with no material impact by working closely with our suppliers and customers. Supply shortages can lead and have in the past led to increased raw material price volatility.
While we have experienced industry-wide shortages of certain raw materials in the past, we have been able to manage supply disruptions by working closely with our suppliers and customers. Supply shortages, along with other factors, can lead and have in the past led to increased raw material price volatility.
Developing Talent At Amcor, we are dedicated to attracting, developing, engaging, and retaining the best talent to deliver our 'Winning Aspiration' and ensure a strong succession pipeline for the future. Our approach to talent is guided by the understanding that differentiated, industry-leading talent deployed consistently across our business will enable Amcor’s success.
Our approach to talent is guided by the understanding that by creating a truly differentiated, industry-leading pool of talent which can be deployed consistently across our business, we will better enable Amcor’s success. Amcor is dedicated to attracting, developing, engaging, and retaining the best talent and strengthening our succession pipeline for the future.
We are one global team in which everyone has a voice and can make a difference. With this in mind, we work to create a team environment that develops inclusive leaders, where we learn from our people, and where listening, trust, and respect are key behaviors that form the foundation of our interactions and foster mutual understanding.
With this in mind, we work to create a team environment that develops inclusive leaders, where we learn from our people, and where listening, trust, and respect are key behaviors that form the foundation of our interactions and foster mutual understanding. We focus on strengthening 'talent through diversity' and progress is reported to our Board annually.
Examples of these programs include a Leading to Outperform program ("LTO") to further advance high-potential talent, a Senior Leader Development program ("SLDP") focusing on developing strategic management skills and inclusive leadership, and an Executive Development program ("EDP") for our most senior leaders. In each of these programs we partner with leading academic and executive education institutions from around the world.
Examples of these programs include a Leading to Outperform program ("LTO") to further advance high-potential talent, a Senior Leader Development program ("SLDP") focusing on developing strategic management skills and inclusive leadership. In fiscal year 2023, we introduced a new aspect to our Executive Development program ("EDP").
Research and Development Refer to Note 2, "Significant Accounting Policies," of the notes to consolidated financial statements for information about our research and development expenditures and policies. 9 Human Capital Management Overview Amcor’s aspiration is to be ‘THE leading global packaging company'. Our people are core to the achievement of our aspiration.
Research and Development Refer to section "Sustainability and Innovation" within "Item 1. - Business" of this Annual Report on Form 10-K, and to Note 2, "Significant Accounting Policies," of the notes to consolidated financial statements, for further information about our research and development activities, expenditures, and policies. 10 Human Capital Management Overview Amcor’s aspiration is to be ‘THE leading global packaging company'.
We aim to create inclusive working environments to ensure each colleague feels valued, treated with respect, encouraged to speak, and empowered to be their best.
At Amcor, we are stronger because of the diverse strengths, styles, cultures, and experiences of our people. We aim to create inclusive working environments to ensure each colleague feels valued, treated with respect, encouraged to speak, and empowered to be their best.
We deploy systems and processes to ensure our people have clear goals and are empowered to achieve them. Through performance management, we align these goals to business targets, providing line of sight so each employee understands how they contribute to our success. Through formal reviews, performance coaching, and feedback, our leaders implement a rigorous cycle to foster talent.
Through performance management, we align these goals to business targets, providing line of sight so each employee understands how they contribute to our success. Through formal reviews, performance coaching, and feedback, our leaders implement a rigorous cycle to foster talent. Learning & Development We have implemented training and education programs to help our employees progress across functions and experience levels.
Becoming THE leading global packaging company requires us to create a culture in which everyone feels encouraged to speak and compelled to listen. Amcor is stronger as a result of the diverse talents, styles, cultures, and experiences of our people. With different perspectives come different solutions that enable us to win for our stakeholders.
Becoming THE leading global packaging company requires us to create a culture in which everyone feels encouraged to speak and compelled to listen. Amcor values the diverse experience, strengths, styles, nationalities, and cultures of all our people.
Increases in the price of raw materials are generally able to be passed on to customers through contractual price mechanisms over time and other means.
Increases in the price of raw materials are generally able to be passed on to customers through contractual price mechanisms over time and other means. We manage the risks associated with our supply chain and have generally been able to maintain adequate raw materials through relationship management, inventory management and evaluation of alternative sources when practical.
Recognizing the importance of the learning journey, our employees can also access our "Masterclass" program which delivers an annual series of executive education briefings on topics of functional excellence and business initiatives. Our focus this year has been on Accelerating Growth with showcase presentations from Marketing, R&D, Product Branding, and Innovation Leaders.
In each of these programs, we partner with leading academic and executive education institutions from around the world. Recognizing the importance of the learning journey, our employees can also access our "Masterclass" program which delivers an annual series of executive education briefings on topics of functional excellence and business initiatives.
"Risk Factors." Seasonal Factors The business of each of the reportable segments is not seasonal to any material extent.
For a more detailed description of the various laws and regulations that affect our business, see "Item 1A. - Risk Factors." Seasonal Factors Our business and operations of each of the reportable segments is not seasonal to any material extent.
We focus on strengthening 'talent through diversity' and progress is reported to our Board annually. We continually review opportunities to strengthen our diversity transparency practices while adhering to privacy legislation in certain regions where we operate. Engagement During fiscal year 2022, we completed our fifth global engagement survey.
We continually review opportunities to strengthen our diversity transparency practices while adhering to privacy legislation in certain regions where we operate. The Board receives an annual report on our progress towards its diversity, equity, and inclusion efforts.
We expect supply disruption and price volatility to continue into fiscal year 2023 and will continue to work closely with our suppliers and customers in an effort to minimize the impact on our operations . 7 Intellectual Property We are the owner or licensee of more than a thousand United States and other country patents and patent applications that relate to our products, manufacturing processes, and equipment.
For more information, see "Item 1A. 7 - Raw Materials — Price fluctuations or shortages in the availability of raw materials, energy and other inputs could adversely affect our business.” 8 Intellectual Property We are the owner or licensee of more than a thousand United States and other country patents and patent applications that relate to our products, manufacturing processes, and equipment.
Learning & Development We have implemented training and education programs to help our employees progress across functions and experience levels.
We have a range of executive development, leadership training, education, and awareness programs to help employees progress across all functions and experience levels. We deploy systems and processes to ensure our people have clear goals and are empowered to achieve them.
We also partner with non-governmental organizations, promising startups, and cross-industry initiatives and bodies. These partnerships enable us to learn, experience other perspectives, share our expertise, and expand our innovation. With our partners, we advocate for sound global standards, better waste management infrastructure, and more consumer participation. We consider our overall environmental footprint to go well beyond the products we create.
These partnerships enable us to learn, experience other perspectives, share our expertise, and expand our innovation. With our partners, we advocate for sound global design standards, better waste management infrastructure, and higher levels of consumer participation in recycling that will be required to develop a true circular economy for packaging.
Sustainability is comprehensively embedded across our business, from the investments we are making in sustainable packaging innovation and design, to the partnerships we enter, and to how we run our manufacturing operations more efficiently. Innovation is central to Amcor’s approach to sustainability and we spend approximately $100 million a year on research and development.
Sustainability and Innovation Sustainability is comprehensively embedded across our business, from the investments we are making in packaging innovation and design, to our global collaboration strategy, to the work we undertake within our own operations and with our upstream and downstream partners to develop a more responsible packaging value chain.
We are highly regarded for our innovation capabilities and have more than a thousand active patents. We solve packaging challenges, developing differentiated products, services, and processes to protect our customers products and fulfil the needs of the consumers who rely on them around the globe.
We are highly regarded for our innovation capabilities and have more than 1,000 active patents, as well as a global network of Innovation Centers focused on bringing advanced packaging technologies and more sustainable material science to our markets around the world.
Titled "OurVoice@Amcor", the survey tracks the engagement of our employees across multiple dimensions and provides a benchmark against other global manufacturing companies. In the recent 2022 survey, we received feedback from over 30,000 Amcor employees from every country and business group.
Engagement At Amcor, we believe strongly in Engagement being a key driver of performance and so we track the engagement of our employees in every region and across multiple dimensions, including against other global manufacturing companies through engagement surveys.
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Through our unique material science and innovation capabilities, we also advise our customers on the best solutions for their specific needs and those of their consumers – with broad flexibility across packaging functionality, formats, and materials.
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Innovation is central to Amcor’s approach to sustainability and we spend approximately $100 million a year on research and development ("R&D"), not including ongoing investment in incremental continuous improvements.
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During fiscal year 2022, we reduced the number of injuries by 3% and 57% of our sites were injury free. Our response to the COVID-19 pandemic illustrates our commitment to the health and safety of our employees and the communities in which we work.
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We collaborate with like-minded partners, including customers and suppliers, in pursuit of innovative solutions to address some of the world’s most urgent challenges, including increasing recycling and reuse and reducing our environmental impacts. We also partner with non-governmental organizations, promising startups, and cross-industry initiatives and bodies.
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We implemented rigorous protocols supported by precautionary measures in each of our manufacturing and office locations globally to help ensure the health and safety of our people.
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In June 2023, we took the next step forward in our science-based targets journey by submitting our proposed targets to the SBTi for review .
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As we emerge from the pandemic and continue to focus on the health of our employees, we have worked diligently to provide a compelling workplace for them to return to while recognizing and accommodating the need for flexibility.
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Historically, cash flow from operations has been lower in the first half of the fiscal year, and higher in the second half of the fiscal year, due to working capital management and the timing of certain cash payments made in the first half of the year, including incentive compensation.
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Our "JumpStart@Amcor" global program accelerates onboarding of new employees and provides an avenue for cross-functional learning.
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During fiscal year 2023, we reduced the number of injuri es by 31% and 69% o f our sites were injury free. Developing Talent At Amcor, we are dedicated to attracting, developing, engaging, and retaining the best talent to deliver our 'Winning Aspiration' and ensure a strong succession pipeline for the future.
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We also run an Accelerated Career Development program ("ACDP") which provides a global intake on new talent with a structured rotation to develop commercial capabilities and an enhanced global commercial talent pipeline. 10 Diversity & Inclusion At Amcor, we’re committed to providing an inclusive environment that empowers us to achieve our full potential.
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Our fiscal years 2023-2027 Human Capital Strategy is focused on ensuring that we have the right people in the right jobs at the right time to drive our growth agenda.
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The dominant feedback was that colleagues feel Amcor is a great place to work and that they want more communication with leadership about the direction and future strategies of the Company. Action plans are underway across the organization to provide feedback loops and implement action plans. Ethics Good corporate governance and transparency are fundamental to achieving our aspirations.
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This annual program targets our most senior leaders and provides them an immersive experience in Strategy Development and leading Talent. For fiscal year 2023, we selected a handful of the organization's most high potential leaders and kicked off our EDP 2.0 experience where we seek to expand the participants' capabilities.
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Our focus 11 this year has been on Accelerating Growth with showcase presentations from Marketing, R&D, Product Branding, and Innovation Leaders. Diversity, Equity & Inclusion At Amcor, we’re committed to providing an inclusive environment that empowers us to achieve our full potential.
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Our diversity, equity and inclusion strategy is focused on three main areas: (1) building awareness through training and education to help our leaders be more inclusive, (2) diversifying our global talent pool by removing bias from talent attraction and development, and (3) by sharing best practices and learning across the organization.
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Amcor believes that with different perspectives come different solutions that enable us to win for our stakeholders. We are one global team in which everyone has a voice and can make a difference.
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Our engagement surveys provide employees with an opportunity to share anonymous and confidential feedback on a variety of topics and provide management with insight on areas we can focus on to improve our employees' experience and effect positive change. Ethics Good corporate governance and transparency are fundamental to achieving our aspirations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, increased regulation of emissions linked to climate change, including greenhouse gas (carbon) emissions and other climate-related regulations, could potentially increase the cost of our operations due to increased costs of compliance (which may not be recoverable through adjustment of prices), increased cost of fossil fuel-based inputs and increased cost of energy intensive raw material inputs.
Biggest changeFor instance, an increase in legislation with respect to litter related to plastic packaging or related recycling programs may cause legislators in some countries and regions in which our products are sold to consider banning or limiting certain packaging formats or materials, or applying taxes or fees on some types of our products. 23 Additionally, increased regulation of emissions linked to climate change, including greenhouse gas emissions and other climate-related regulations, could potentially increase the cost of our operations due to increased costs of compliance (which may not be recoverable through adjustment of prices), increased cost of fossil fuel-based inputs and increased cost of energy intensive raw material inputs.
Key Customers and Customer Consolidation — The loss of key customers, a reduction in their production requirements or consolidation among key customers could have a significant adverse impact on our sales revenue and profitability. Relationships with our customers are fundamental to our success, particularly given the nature of the packaging industry and the other supply choices available to customers.
Key Customers and Customer Consolidation — The loss of key customers, a reduction in their production requirements or consolidation among key customers could have a significant adverse impact on our sales revenue and profitability. Relationships with our customers are fundamental to our success, particularly given the nature of the packaging industry and other supply choices available to customers.
Additionally, changes in international trade policy in the countries in which we operate could materially impact the cost and supply of raw materials as duties are assessed on raw materials used in our production process and global supply of key raw materials is disrupted.
Additionally, changes in international trade policy in the countries in which we operate could materially impact the cost and supply of raw materials as duties are assessed on raw materials used in our production process and the global supply of key raw materials is disrupted.
However, any failure to successfully transition key new hires and retain our skilled personnel in any of our operations and our global executive management team, could impact our ability to execute on our strategic plans, make it difficult to meet our performance objectives and be disruptive to our business.
However, any failure to successfully transition key new hires and retain our skilled personnel in our global executive management team and in any of our operations could impact our ability to execute on our strategic plans, make it difficult to meet our performance objectives, and be disruptive to our business.
If rating agencies downgrade our credit rating, place us on a watch list, or if there are adverse market conditions, including disruptions in the commercial paper market, the impacts could include reduced access to the commercial paper, credit and capital markets, an increase in the cost of our borrowings or the fees associated with our bank credit facility, or an increase in the credit spread incurred when issuing debt in the capital markets.
If rating agencies downgrade our credit rating, place us on a watch list, or if there are adverse market conditions, including disruptions in the commercial paper market, the impacts could include reduced access to commercial paper, credit, and capital markets, an increase in the cost of our borrowings or the fees associated with our bank credit facility, or an increase in the credit spread incurred when issuing debt in the capital markets.
However, it may be possible for a third party to obtain our information without our authorization, independently develop similar technologies, or breach a non-disclosure agreement entered into with us. Our pending patent applications, and our pending trademark registration applications, may not be allowed or competitors may challenge the validity or scope of our patents or trademarks.
However, it may be possible for a third-party to obtain our information without authorization, independently develop similar technologies, or breach a non-disclosure agreement entered into with us. Our pending patent applications and our pending trademark registration applications may not be allowed, or competitors may challenge the validity or scope of our patents or trademarks.
Furthermore, many of the countries in which we operate, particularly the emerging markets, do not have intellectual property laws that protect proprietary rights as fully as the laws of the more developed jurisdictions in which we operate, such as the United States and the European Union.
Furthermore, many of the countries in which we operate, particularly emerging markets, do not have intellectual property laws that protect proprietary rights as fully as the laws of more developed jurisdictions, such as the United States and the European Union.
Many of our large, global customers are also committing to long-term targets to reduce greenhouse gas emissions within their supply chains. If we are unable to support customers in achieving these reductions, customers may seek out competitors who are better able to support such reductions.
Many of our large, global customers are also committing to long-term targets to reduce greenhouse gas emissions within their supply chains. If we are unable to support our customers in achieving these reductions, customers may seek out competitors who are better able to support such reductions.
Our business strategy includes both organic expansion of our existing operations, particularly through efforts to strengthen and expand relationships with customers in emerging markets, product innovation, including to address changes in the industry or regulatory environments, and expansion through acquisitions. However, we may not be able to execute our strategy effectively for reasons within and outside our control.
Our business strategy includes both organic expansion of our existing operations, particularly through efforts to strengthen and expand relationships with customers in emerging markets, product innovation (including to address changes in the industry or regulatory environments) and expansion through investments and acquisitions. However, we may not be able to execute our strategy effectively for reasons within and outside our control.
Further, there can be no assurance that the laws of Jersey, Channel Islands, will not change in the future or that they will serve to protect investors in a similar fashion afforded under corporate law principles in the U.S., which could adversely affect the rights of investors. 22 U.S. shareholders may not be able to enforce civil liabilities against us.
Further, there can be no assurance that the laws of Jersey, Channel Islands, will not change in the future or that they will serve to protect investors in a similar fashion afforded under corporate law principles in the U.S., which could adversely affect the rights of investors. U.S. shareholders may not be able to enforce civil liabilities against us.
While we have been successful to date in responding to regional labor shortages and maintaining plans for continuity of succession, there can be no assurance that we will be able to manage through future labor shortages or recruit, develop, assimilate, motivate, and retain employees in the future who actively promote and meet the standards of our culture.
While we have been successful to date in responding to regional labor shortages and maintaining plans for continuity of succession, there can be no assurance that we will be able to manage future labor shortages or recruit, develop, assimilate, motivate, and retain employees in the future who actively promote and meet the standards of our culture.
We have incurred in the past, and may incur in the future, fines, penalties, and legal costs relating to environmental matters, and costs relating to the damage of natural resources, lost property values, and toxic tort claims. Provisions are raised 17 when it is considered probable that we have some liability and the amount can be reasonably estimated.
We have incurred in the past and may incur in the future, fines, penalties, and legal costs relating to environmental matters, and costs relating to the damage of natural resources, lost property values, and toxic tort claims. Provisions are raised when it is considered probable that we have some liability, and the amount can be reasonably estimated.
The costs associated with protecting our intellectual property rights could also adversely impact our business. Similarly, while we have not received any significant claims from third parties suggesting that we may be infringing on their intellectual property rights, there can be no assurance that we will not receive such claims in the future.
The costs associated with protecting our intellectual property rights could also adversely impact our business. 22 Similarly, while we have not received any significant claims from third parties suggesting that we may be infringing on their intellectual property rights, there can be no assurance that we will not receive such claims in the future.
For many of our businesses, organic growth depends on product innovation, new product development, and timely responses to changing consumer demands and preferences. Consequently, failure to develop new or improved products in response to changing consumer preferences in a timely manner may hinder our growth potential, affect our competitive position, and adversely affect our business and results of operations.
For many of our businesses, organic growth depends on product innovation, new product development, and timely responses to changing consumer demands and preferences. Consequently, failure to develop new or improved products in response to changing consumer preferences in a timely manner may hinder our growth potential, impact our competitive position, and adversely affect our business and results of operations.
However, because the extent of potential environmental damage, and the extent of our liability for such damage, is usually difficult to assess and may only be ascertained over a long period of time, our actual liability in such cases may end up being substantially higher than the currently provisioned amount.
However, because the extent of potential environmental damage and the extent of our liability for such damage, is usually difficult to assess and may only be ascertained over a long period of time, our actual liability in such cases may end up being substantially higher than the 18 currently provisioned amount.
While we have generally been successful at managing customer consolidations, increased pricing pressures from our customers could have a material adverse effect on our results of operations. Competition — We face significant competition in the industries and regions in which we operate, which could adversely affect our business.
While we have generally been successful in managing customer consolidations, increased pricing pressures from our customers could have a material adverse effect on our results of operations. Competition — We face significant competition in the industries and regions in which we operate, which could adversely affect our business.
If a counterparty becomes insolvent or is otherwise unable to meet its obligations in connection with a particular project, we may need to find a replacement to fulfill that party’s obligations or, alternatively, fulfill those obligations ourselves, which is likely to be more expensive.
If a counterparty becomes insolvent or is otherwise unable to meet its obligations in connection with a particular project, we may need to find a replacement to fulfill that party’s obligations or, alternatively, fulfill those obligations ourselves, which is 17 likely to be more expensive.
Environmental, Social and Governance ("ESG") Practices — Increasing scrutiny and changing expectations from investors, customers, and governments with respect to our ESG practices and commitments may impose additional costs on us or expose us to additional risks. 21 There is an increased scrutiny from shareholders, customers, and governments on corporate ESG practices.
Environmental, Social and Governance ("ESG") Practices — Increasing scrutiny and changing expectations from investors, customers, and governments with respect to our ESG practices and commitments may impose additional costs on us or expose us to additional risks. There is an increased scrutiny from shareholders, customers, and governments on corporate ESG practices.
Our ability to pay interest and repay the principal of our indebtedness is dependent on our ability to generate sufficient cash flows which is dependent, in part, on prevailing economic and competitive conditions and certain legislative, regulatory, and other factors beyond our control.
Our ability to pay interest and repay the principal of our indebtedness is dependent on our ability to generate sufficient cash flows, which is 20 dependent, in part, on prevailing economic and competitive conditions and certain legislative, regulatory, and other factors beyond our control.
Attracting and Retaining Skilled Workforce — If we are unable to attract and retain our global executive management team and our skilled workforce, we may be adversely affected. Our continued success depends on our ability to identify, attract, develop, and retain skilled personnel in our global executive management team and our operations.
Attracting and Retaining Skilled Workforce — If we are unable to attract and retain our global executive management team and our skilled workforce, we may be adversely affected. Our continued success depends on our ability to identify, attract, develop, and retain skilled and diverse personnel in our global executive management team and our operations.
Our competitors might avoid infringement by designing around our intellectual property rights or by developing non-infringing competing technologies. In addition, our patents, trademarks, and other intellectual property rights may not provide us a significant competitive advantage.
Our competitors might avoid infringement by designing around our intellectual property rights or by developing non-infringing competing technologies. In addition, our patents, trademarks, and other intellectual property rights may not provide us with a significant competitive advantage.
Financial Risks Indebtedness and Credit Rating — A significant increase in our indebtedness or a downgrade in our credit rating could reduce our operating flexibility and increase our borrowing costs and negatively affect our financial condition and results of operations.
Indebtedness and Credit Rating — A significant increase in our indebtedness or a downgrade in our credit rating could reduce our operating flexibility and increase our borrowing costs and negatively affect our financial condition and results of operations.
In addition, rising interest rates could reduce the attractiveness of cash management programs we use, such as customer and supply chain finance programs, which could negatively impact our cash and working capital and increase our borrowings. Refer to Note 14, "Debt," of the notes to consolidated financial statements for information about our variable rate borrowings.
In addition, continued increases in rising interest rates could reduce the attractiveness of cash management programs we use, such as customer and supply chain finance programs, which could negatively impact our cash and working capital and increase our borrowings. Refer to Note 14, "Debt," of the notes to consolidated financial statements for information about our variable rate borrowings.
A significant portion of our assets are located outside of the United States and several of our directors and officers are citizens or residents of jurisdictions outside of the United States.
A significant portion of our assets is located outside of the United States and several of our directors and officers are citizens or residents of jurisdictions outside of the United States.
Intellectual property litigation, which could result in substantial cost to us and divert the attention of management, may be necessary to protect our trade secrets or proprietary technology or for us to defend against claimed infringement of the rights of others and to determine the scope and validity of others’ proprietary rights.
Intellectual property litigation, which could result in substantial costs to us and divert the attention of management, may be necessary to protect our trade secrets or proprietary technology or for us to defend against claimed infringement of the rights of others and to determine the scope and validity of others’ proprietary rights.
However, there is uncertainty whether a U.S. or Jersey court would enforce the exclusive forum provision for actions claiming breach of fiduciary duty and other claims. 23 Item 1B. - Unresolved Staff Comments None.
However, there is uncertainty whether a U.S. or Jersey court would enforce the exclusive forum provision for actions claiming breach of fiduciary duty and other claims. 24 Item 1B. - Unresolved Staff Comments None.
We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all. Failure to protect our patents, trademarks, and other intellectual property rights could have an adverse effect on our business, financial condition, results of operations, or cash flows.
We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all. Failure to protect our patents, trademarks, and other intellectual property rights could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
In addition, there may be delays in adjusting prices to correspond with underlying raw material costs and corresponding impacts on our working capital and level of indebtedness and any failure to anticipate or mitigate against such movements could have an adverse effect on our business, financial condition, results of operations, or cash flows, which effect may be material.
In addition, there may be delays in adjusting prices to correspond with underlying raw material costs and corresponding impacts on our working capital and level of indebtedness and any failure to anticipate or mitigate against such movements could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Additionally, the insolvency of, or contractual default by, any of our customers, suppliers, and financial institutions, such as banks and insurance providers, may have a significant adverse effect on our operations and financial condition.
Additionally, the insolvency of, or contractual default by, any of our customers, suppliers, and financial institutions, such as banks and insurance providers, may have a material adverse effect on our operations and financial condition.
If we are unable to identify acquisition targets that meet our investment criteria and close such transactions on acceptable terms, our potential for growth by way of acquisition may be restricted, which could have an adverse effect on achievement of our strategy and the resulting expected financial benefits.
If we are unable to identify acquisition targets that meet our investment criteria and close such transactions on acceptable terms, our potential for growth by way of acquisition may be restricted, which could have a material adverse effect on the achievement of our strategy and the resulting expected financial benefits.
Such risks are exacerbated in times of economic volatility (such as economic volatility caused by COVID-19 and the Russia-Ukraine conflict), either globally or in the geographies and industries in which our customers operate.
Such risks are exacerbated in times of economic volatility (such as economic volatility caused by the Russia-Ukraine conflict), either globally or in the geographies and industries in which our customers operate.
Various government agencies may promulgate new or modified legislation, and implement special emphasis programs and enforcement actions that could impact specific Company operations covered by the respective program.
Various government agencies may promulgate new or modified legislation and implement special emphasis programs and enforcement actions that could impact specific Amcor operations covered by the respective program.
Insurance — Our insurance policies, including our use of a captive insurance company, may not provide adequate protection against all of the risks we face. We seek protection from a number of our key operational risk exposures through the purchase of insurance. A significant portion of our insurance is placed in the insurance market with third-party re-insurers.
Insurance — Our insurance policies, including our use of a captive insurance company, may not provide adequate protection against all of the risks we face. We seek protection from a number of our key operational risk exposures through the purchase of insurance. A significant portion of our insurance is placed in the insurance market with third-party reinsurers.
If we are unable to detect the infringement of our intellectual property or to enforce our intellectual property rights, our competitive position may suffer. The use of our intellectual property by someone else without our authorization could reduce certain of our competitive advantages, cause us to lose sales or otherwise harm our business.
If we are unable to detect the infringement of our intellectual property or to enforce our intellectual property rights, our competitive position may suffer. The unauthorized use of our intellectual property by someone else could reduce certain of our competitive advantages, cause us to lose sales, or otherwise harm our business.
If we are unable to maintain sufficient cash flows from operations to meet our debt commitments, our financial condition and results of operations are likely to be materially adversely impacted. We use cash provided by operations, commercial paper issuances, bank term loans, committed revolving credit facilities, debt issuances, and equity issuances to meet our funding needs.
If we are unable to maintain sufficient cash flows from operations to meet our debt commitments, our financial condition and results of operations are likely to be materially adversely impacted. We use cash provided by operations, commercial paper issuances, bank term loans, committ ed and uncommitted revolving credit facilities, debt issuances, and equity issuances to meet our funding needs.
Any new products that we produce may not meet sales or margin expectations due to many factors, including our or our customers' inability to accurately predict customer demand, end user preferences or movements in industry standards, or to develop products that meet consumer demand in a timely and cost-effective manner.
Any new products we produce may fail to meet sales or margin expectations due to various factors, including our or our customers' inability to accurately predict customer demand, end user preferences or movements in industry standards, or to develop products that meet consumer demand in a timely and cost-effective manner.
Cybersecurity Risk — The disruption of our operations or risk of loss of our sensitive business information could negatively impact our financial condition and results of operations.
Information Technology and Cybersecurity Risks Cybersecurity Risk — The disruption of our operations or risk of loss of our sensitive business information could negatively impact our financial condition and results of operations.
We focus on our talent acquisition processes, as well as our onboarding and talent and leadership programs, to ensure our key new hires and skilled personnel’s efficiency and effectiveness aligns with Amcor’s values and ways of working.
We focus on our talent acquisition processes, as well as our onboarding and talent and leadership programs, to ensure that our key new hires and skilled personnel’s efficiency and effectiveness align with Amcor’s values and ways of working.
We face a number of commercial risks, including (i) operational disruption, such as mechanical or technological failures or forced closures due to pandemics or war (such as COVID-19 or the Russia-Ukraine conflict), each of which could, in turn, lead to production loss and/or increased costs, (ii) shortages in manufacturing inputs due to the loss of key suppliers or their inability to supply inputs and (iii) risks associated with development projects (such as cost overruns and delays).
We face a number of commercial risks, including (i) operational disruption, such as mechanical or technological failures or forced closures due to war (such as the Russia-Ukraine conflict) or health crises, each of which could lead to production loss and/or increased costs, (ii) shortages in manufacturing inputs due to the loss of key suppliers or their inability to supply inputs, and (iii) risks associated with development projects (such as cost overruns and delays).
In addition, our information systems increasingly rely on cloud solutions which require different security measures. These measures cover technical changes to our network security, organization, and governance changes as well as alignment of third-party suppliers on market standards.
In addition, our information systems rely on internal information technology systems and third-party systems, including cloud solutions, which require different security measures. These measures cover technical changes to our network security, organization, and governance changes as well as alignment of third-party suppliers on market standards.
While we do not have a single customer accounting for more than ten percent of our net sales, customer concentration can be more pronounced within certain businesses.
While we do not have a single customer accounting for more than 10% of our net sales, customer concentration can be more pronounced within certain businesses.
While we have largely been able to successfully manage through these supply disruptions and related price volatility, there is no assurance we will be able to successfully navigate through any ongoing and future disruptions. Increases in costs and disruptions in supply can have an adverse effect on our business and financial results.
While we have largely been able to successfully manage through these supply disruptions and related price volatility, there is no assurance that we will be able to successfully navigate ongoing and future disruptions. Increases in costs and disruptions in supply can have a material adverse effect on our business and financial results.
Supply shortages, fluctuations in freight costs, limitations on shipping capacity, or other disruptions in our supply chain, including as a result of sourcing materials from a single supplier or those that may occur related to COVID-19 or other natural disasters, or war, could affect our ability to obtain timely delivery of raw materials, equipment and other supplies, and in turn, adversely impact our ability to supply products to our customers.
Supply or workforce shortages, fluctuations in freight costs, limitations on shipping capacity, or other disruptions in our supply chain, including sourcing materials from a single supplier or those that may occur related to war, natural disasters, or health crises, could affect our ability to obtain timely delivery of raw materials, equipment, and other supplies, and in turn, adversely impact our ability to supply products to our customers.
Our Board of Directors has approved a hedging policy to limit and manage the risk of such foreign exchange fluctuations, however, if our hedges are not effective in mitigating our foreign currency risks, if we are under-hedged, or if a hedge provider defaults on their obligations under hedging arrangements, it could have an adverse impact on our results of operations.
Our Board of Directors has approved a hedging policy to limit and manage the risk of such foreign exchange fluctuations, however, if our hedges are not effective in mitigating our foreign currency risks, if we are under-hedged, or if a hedge provider defaults on their obligations under hedging arrangements, it could have a material adverse impact on our reported cash flow, financial condition, and results of operations.
Changing preferences for products and packaging formats may result in increased demand for other products we produce. However, to the extent changing preferences are not offset by demand for new or alternative products, changes to consumer preferences could have an adverse effect on our business, financial condition, results of operations, or cash flows.
Changing preferences for products and packaging formats may result in increased demand for other products we produce. However, if changing preferences are not offset by demand for new or alternative products, changes in consumer preferences could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Item 1A. - Risk Factors The following factors, as well as factors described elsewhere in this Annual Report on Form 10-K, or in other filings by us with the Securities and Exchange Commission, could adversely affect our business, financial condition, results of operations, or cash flows.
Item 1A. - Risk Factors The following factors, as well as factors described elsewhere in this Annual Report on Form 10-K, or in other filings by us with the Securities and Exchange Commission, could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
As a manufacturer of packaging products, our sales and profitability are dependent on the availability and cost of raw materials and labor and other inputs, including energy. All of the raw materials we use are purchased from third parties and our primary inputs include polymer resins and films, inks and solvents, aluminum, and fiber-based carton board.
As a manufacturer of packaging products, our sales and profitability are dependent on the availability and cost of raw materials, labor, and other inputs, including energy. All of the raw materials we use are purchased from third parties, and our primary inputs include polymer resins and films, paper, inks, solvents, adhesive, aluminum, and chemicals.
As such, we may be exposed to future exchange rate fluctuations, and such fluctuations could have an adverse effect on our 19 reported cash flow, financial condition, and results of operations, the effect of which may be material.
As such, we may be exposed to future exchange rate fluctuations, and such fluctuations could have a material adverse effect on our reported cash flow, financial condition, and results of operations.
The captive insurance company may be required to make payment for insurance claims which exceed the captive's reserves, which could have an adverse effect on our business, financial condition, results of operations, or cash flows.
The captive insurance company may be required to make payments for insurance claims that exceed the captive's reserves, which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
However, if our derivative instruments are not effective in mitigating our interest rate risk, if we are under-hedged, or if a hedge provider defaults on their obligations under hedging arrangements, it could have an adverse impact on our results of operations.
However, if our derivative instruments are not effective in mitigating our interest rate risk, if we are under-hedged, or if a hedge provider defaults on their obligations under hedging arrangements, it could have a material adverse impact on our business, financial condition, results of operations, or cash flow.
In addition, actions we have taken or may take, or decisions we have made or may make, as a consequence of COVID-19 or the Russia-Ukraine conflict, may result in legal claims or litigation against us. Refer to "Item 3. - Legal Proceedings" of this Annual Report on Form 10-K.
In addition, actions or decisions we have taken or may take, as a consequence of the Russia-Ukraine conflict, may result in legal claims or litigation against us. See "Item 3. - Legal Proceedings" of this Annual Report on Form 10-K.
As with all information technology systems, our systems may be susceptible to damage, disruption, information loss or shutdown due to a variety of factors including power outages, failures during the process of upgrading or replacing software, hardware failures, computer viruses, catastrophic events, telecommunications failures, user errors, unauthorized access, and malicious or accidental destruction, or theft of information or functionality.
As with all information technology systems, our systems may be susceptible to damage, disruption, information loss, or shutdown due to a variety of factors including power outages, failures during the process of upgrading or replacing software, hardware failures, cyber-attacks (e.g., phishing, ransomware, computer viruses), natural disasters, telecommunications failures, user errors, unauthorized access, and malicious or accidental destruction, or catastrophic events.
In addition, we have recognized foreign exchange losses related to the currency devaluation in Argentina and its designation as a highly inflationary economy under U.S. GAAP. See Note 2, "Significant Accounting Policies," of the notes to consolidated financial statements for further information regarding highly inflationary accounting.
In addition, we have recognized foreign exchange losses related to the currency devaluation in Argentina and its designation as a highly inflationary economy under U.S. GAAP. Refer to Note 2, "Significant Accounting Policies," of the notes to consolidated financial statements in this Annual Report on Form 10-K for further information regarding highly inflationary accounting.
New government regulations could also result in new or more stringent forms of ESG oversight and disclosures which may result in increased expenditures for environmental controls, new taxes on the products we produce and significantly increase our compliance costs to meet new disclosure requirements.
New government regulations could also result in new or more stringent forms of ESG oversight and disclosures which may result in increased expenditures for environmental controls, new taxes on the products we produce and significantly increase our compliance costs to meet new disclosure requirements, especially if they are inconsistent or fragmented across different jurisdictions.
This consolidation has increased the concentration of our business with these customers. Such consolidation may be accompanied by pressure from customers for lower prices, reflecting the increase in the total volume of products purchased or the elimination of a price differential between the acquiring customer and the company acquired.
Such consolidation may be accompanied by pressure from customers for lower prices, reflecting the increase in the total volume of products purchased or the elimination of a price differential between the acquiring customer and the acquired company.
Litigation — Litigation, including product liability claims, or regulatory developments could adversely affect our business operations, and financial performance. We are, and in the future will likely become, involved in lawsuits, regulatory inquiries, and governmental and other legal proceedings arising out of the ordinary course of our business.
Litigation — Litigation, including product liability claims, or regulatory developments could adversely affect our business operations, and financial performance. We are, and in the future will likely become, involved in lawsuits, regulatory inquiries, and governmental and other legal proceedings that arise in the ordinary course of our business, including product liability claims, which may lead to financial or reputational damages.
We have operations throughout the world, including facilities located in emerging markets. In fiscal year 2022, approximately 73% of our sales revenue came from developed markets and 27% came from emerging markets. We expect to continue to expand our operations in the future, particularly in the emerging markets.
We have operations throughout the world, including facilities in emerging markets. In fiscal year 2023, approximately 74% of our sales revenue came from developed markets and 26% came from emerging markets. We expect to continue to expand our operations in the future, including in the emerging markets.
While our internal controls over financial reporting currently meet the standards set forth in SOX, our internal control over financial reporting may not prevent or detect misstatements as any controls or procedures, no matter how well designed and operated, can provide only reasonable assurance from misstatement.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting and while they meet the standards set forth in SOX, our internal control over financial reporting may not prevent or detect misstatements, as any controls or procedures, no matter how well designed and operated, can provide only reasonable assurance against misstatement.
Although we believe the coverage provided by such policies is consistent with industry practice, they may not adequately cover certain risks and there is no guarantee that any 20 claims made under such policies will ultimately be paid or that we will be able to maintain such insurance at acceptable premium cost levels in the future.
Although we believe the coverage provided by such policies is consistent with industry practice, the insurance coverage does not insure us against all risks in our operations or all claims we may receive and there is no guarantee that any claims made under such policies will ultimately be paid or that we will be able to maintain such insurance at acceptable premium cost levels in the future.
We are also impacted by regional labor shortages, inflationary pressures on wages, and an increasingly competitive labor market.
We are also impacted by regional labor shortages, inflationary pressures on wages, a competitive labor market, and changing demographics.
Despite our efforts to protect such information, our facilities and systems 18 and those of our customers and third-party service providers may be vulnerable to security breaches, cyber-attacks, misplaced or lost data, and programming and/or user errors that could lead to the compromising of sensitive, confidential, or personal data or information.
Despite our efforts to protect such information and to comply with privacy and data protection laws and 19 regulations, our facilities and systems and those of our customers and third-party service providers may be vulnerable to security breaches, cyber-attacks, misplaced or lost data, and programming and/or user errors that could lead to the compromising of sensitive, confidential, or personal data or information, the improper use of our systems and networks, and the manipulation and destruction of data.
Environmental, Health, and Safety regulations — Changing government regulations in environmental, health, and safety matters, including climate change, may adversely affect our company. Numerous legislative and regulatory initiatives have been passed and anticipated in response to concerns about greenhouse gas emissions and climate change. We are a manufacturing entity that utilizes petrochemical-based raw materials to produce many of our products.
Numerous legislative and regulatory initiatives have been passed and anticipated in response to concerns about greenhouse gas emissions and climate change. We are a manufacturing entity that utilizes petrochemical-based raw materials to produce many of our products.
Although we seek to mitigate these risks through various strategies, including by entering into contracts with certain customers which permit certain price adjustments to reflect increased raw material costs or by otherwise seeking to increase our prices to offset increases in raw material costs and seeking alternative sources of supply for key raw materials, there is no guarantee that we will be able to anticipate or mitigate commodity and input price movements or mitigate supply disruptions.
We seek to mitigate these risks through various strategies, including entering into contracts with certain customers that permit price adjustments to reflect increased raw material and other costs or by otherwise seeking to increase our prices to offset increases in raw material and other costs and seeking alternative sources of supply for key raw materials.
Alternative consumer preferences for products in the industries that we serve or the packaging formats in which such products are delivered, whether as a result of changes in cost, convenience or health, environmental and social concerns and perceptions, may result in a decline in the demand for certain of our products or the obsolescence of some of our existing products.
Alternative consumer preferences for products in the industries that we serve or the packaging formats in which such products are delivered, whether as a result of changes in cost, economic environments, regulatory developments (including end user taxes), convenience or health, environmental, and social concerns, and perceptions, such as pressure to reduce packaging waste and the use of petrochemical components, may result in a decline in the demand for certain of our products or the obsolescence of some of our existing products.
These broader consequences could have a material adverse effect on our business, cash flow, financial condition, and results of operations. The international scope of our operations, which includes limited sales of our products to entities located in countries subject to certain economic sanctions administered by the U.S. Office of Foreign Assets Control, and the U.S.
These broader consequences could have a material adverse effect on our business, cash flow, financial condition, and results of operations. Our international operations involve limited sales to entities located in countries subject to economic sanctions administered by the U.S. Office of Foreign Assets Control, the U.S. Department of State, and Trade and other applicable national and supranational organizations (collectively, "Sanctions").
Further, sustained periods of legal, regulatory, or political instability in the emerging markets in which we operate could have an adverse effect on our business, cash flow, financial condition, and results of operations, which effect may be material.
Furthermore, prolonged periods of economic, legal, regulatory, or political instability in the emerging markets where we operate could have a material adverse effect on our business, cash flow, financial condition, and results of operations.
As of June 30, 2022, we had $6.9 billion of goodwill and other intangible assets. We review our goodwill balance for impairment at least once a year and whenever events or a change in circumstances indicate that an impairment may have occurred using the business valuation methods allowed in accordance with current accounting standards.
We review our goodwill balance for impairment at least once a year and whenever events or a change in circumstances indicate that an impairment may have occurred using the appropriate business valuation methods in accordance with current accounting standards.
Our policies with such third-party re-insurers cover a variety of risk exposures, including property damage.
Our policies with such third-party reinsurers cover a variety of risk exposures, including property damage and business interruption.
We operate in highly competitive geographies and end use areas, each with varying barriers to entry, industry structures, and competitive behavior. We regularly bid for new and continuing business in the industries and regions in which we operate and we continue to change in response to consumer demand. We cannot predict with certainty the changes that may affect our competitiveness.
We operate in highly competitive geographies and end use areas, each with varying barriers to entry, industry structures, and competitive behavior. We regularly bid for new and continuing business in the industries and regions in which we operate, and we continually adapt to changes in consumer demand.
Operational EHS Risks — We are subject to costs and liabilities related to current and future environment, health and safety ("EHS") laws and regulations, as well as changes in the global climate, that could adversely affect our business.
Operational EHS Risks — We are subject to costs and liabilities related to environment, health and safety ("EHS") laws and regulations, as well as changes in the global climate, that could adversely affect our business. We are required to comply with EHS laws, rules, and regulations in each of the countries in which we operate and do business.
The occurrence of any of these risks, including any default by our counterparties, could have an adverse effect on our business, financial condition, results of operations, or cash flows, which effect may be material and result in a competitive disadvantage.
The occurrence of any of these risks could have a material adverse effect on our business, financial condition, results of operations, or cash flows, which may result in a competitive disadvantage. Health Crises — Our business and operations may be adversely affected by pandemics, epidemics, or other disease outbreaks.
The profitability of our operations may be adversely impacted by, among other things: • changes in applicable fiscal or regulatory regimes; • changes in, or difficulties in interpreting and complying with, local laws, sanctions, and regulations, including tax, labor, foreign investment and foreign exchange control laws; • nullification, modification, or renegotiation of, or difficulties or delays in enforcing, contracts with clients or joint venture partners that are subject to local law; • reversal of current political, judicial, or administrative policies encouraging foreign investment or foreign trade, or relating to the use of local agents, representatives, or partners in the relevant jurisdictions; • pandemics, such as COVID-19, impacting various regions of the world unequally; or • changes in exchange rates and inflation, including hyperinflation, which may be further exacerbated by the COVID-19 pandemic.
The profitability of our operations may be adversely impacted by, among other things: • changes in applicable fiscal or regulatory regimes; • changes in, or difficulties in interpreting and complying with, local laws, sanctions, and regulations, including tax, labor, foreign investment, and foreign exchange control laws; • nullification, modification, or renegotiation of, or difficulties or delays in enforcing contracts with clients or joint venture partners that are subject to local law; • reversal of current political, judicial, or administrative policies encouraging foreign investment or foreign trade, or related to the use of local agents, representatives, or partners in relevant jurisdictions; • trade restrictions, and quotas; • wars, acts of terrorism, social and ethnic unrest, and geopolitical events; • pandemics and other health crises impacting different regions of the world unequally; • difficulties associated with expatriating or repatriating cash generated or held abroad; and • changes in exchange rates and inflation, including hyperinflation.
Future changes in the cost of capital, expected cash flows, or other factors may cause our goodwill and/or other intangible assets to be impaired, resulting in a non-cash charge against results of operations to write down these assets for the amount of the impairment.
Future changes in the cost of capital, market multiples, market growth, expected cash flows, or other factors may cause our goodwill and/or other intangible assets to be impaired, resulting in a non-cash charge in our results of operations to reduce the value of these assets to their fair value.
Compliance with these laws and regulations can require significant expenditure of financial and employee resources. In addition, changes to such laws, regulations and standards are made or proposed regularly, and some of the proposals, if adopted, might, directly or indirectly, result in a material reduction in the operating results of one or more of our operating units.
In addition, changes to environmental, health and safety laws, regulations and standards are made or proposed regularly, and some of the proposals, if adopted, might, directly or indirectly, result in a material reduction in the operating results of one or more of our operating units.
In particular, our translational exposure may be impacted by movements in the exchange rate between the Euro, the United Kingdom Pound Sterling, the Australian Dollar, the Chinese Yuan, and the Brazilian Real against the U.S. dollar. Exchange rates between transactional currencies may change rapidly due to a variety of factors.
In particular, our translational exposure may be impacted by movements in the exchange rate between the Euro, the United Kingdom Pound Sterling, the Swiss Franc, the Australian Dollar, the Chinese Yuan, and the Brazilian Real against the U.S. dollar.
Any loss, change, or other adverse event related to our key customer relationships could have an adverse effect on our business, financial condition, results of operations, or cash flows, which effect may be material. In addition, over recent years certain of our customers have acquired companies with similar or complementary product lines.
Any loss, change, or other adverse event related to our key customer relationships could have a material adverse effect on our business, financial condition, results of operations, or cash flows. Furthermore, in recent years, some of our customers have acquired companies with similar or complementary product lines. This consolidation has increased the concentration of our business with these customers.
At June 30, 2022, we had $6.5 billion of debt outstanding and a $1.4 billion undrawn revolving credit facility and we are not restricted in incurring, and may incur, additional indebtedness in the future.
As of June 30, 2023, we ha d $6.7 billion of debt outstanding and a $1.3 billion of a $3.8 billion revolving credit facility undrawn and we are not restricted in incurring, and may incur, additional indebtedness in the future.
Any such breach could have an adverse effect on our financial condition and result in reputational damage to our business, which effect may be material. Raw Materials — Price fluctuations or shortages in the availability of raw materials, energy and other inputs could adversely affect our business.
Any such breach could result in sanctions (including fines and penalties) and could have a material adverse effect on our financial condition and reputation. 16 Raw Materials — Price fluctuations or shortages in the availability of raw materials, energy and other inputs could adversely affect our business.
Weakened global economic conditions may also result in unfavorable changes in our product prices and product mix and lower profit margins. Although we take measures to mitigate the impact of inflation, including through pricing actions and productivity programs, if these actions are not effective our cash flow, financial condition, and results of operations could materially and adversely be impacted.
Although we take measures to mitigate the impact of inflation, including through pricing actions and productivity programs, if these actions are not effective, our cash flow, financial condition, and results of operations could be materially and adversely impacted.
Prices for these raw materials are subject to substantial fluctuations that are beyond our control due to factors such as changing economic conditions, pandemics, such as COVID-19, currency and commodity price fluctuations, resource availability, transportation costs, weather conditions and natural disasters, geopolitical risks, including war (such as the Russia-Ukraine conflict) and 15 instability, and other factors impacting supply and demand pressures.
Prices for these raw materials are subject to substantial fluctuations that are beyond our control due to factors such as changing economic conditions (including inflation), currency and commodity price fluctuations, resource availability and other supply chain challenges, transportation costs, geopolitical risks (including war such as the Russia-Ukraine conflict), pandemics and other health crises, an increase in the demand for products manufactured from recycled materials, weather conditions and natural disasters, greenhouse gas emissions and other sustainability related regulations, and other factors impacting supply and demand pressures.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe breakdown of our significant manufacturing and support facilities at June 30, 2022 were as follows: Flexibles Segment This segment has 169 significant manufacturing and support facilities located in 39 countries, of which 118 are owned directly by us and 51 are leased from outside parties.
Biggest changeThe breakdown of our significant manufacturing and support facilities at June 30, 2023, were as follows: Flexibles Segment This segment has 166 significant manufact uring and support facilities located in 37 countries, of which 114 are owned directly by us and 52 are leased from outside parties.
Initial building lease terms typically provide for minimum terms in a range of two to 36 years and have one or more renewal options. Rigid Packaging Segment This segment has 52 significant manufacturing and support facilities located in 11 countries, of which 12 are owned directly by us and 40 are leased from outside parties.
Initial building lease terms typically provide for minimum terms in a range of two to 36 years and have one or more renewal options. Rigid Packaging Segment This segment has 52 significant manufacturing and support facilities located in 11 countr ies, of which 12 are owned directly by us and 40 are leased from outside parties.
Item 3. - Legal Proceedings Refer to Note 20, "Contingencies and Legal Proceedings," of the notes to consolidated financial statements for information about legal proceedings. Item 4. - Mine Safety Disclosures Not applicable. 24 PART II
Item 3. - Legal Proceedings Refer to Note 20, "Contingencies and Legal Proceedings," of the notes to consolidated financial statements for information about legal proceedings. Item 4. - Mine Safety Disclosures Not applicable. 25 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes $100 was invested on June 11, 2019, and that all dividends were reinvested. The Company has elected to change the composition of the presented peer group from the International Packaging Peer Group to a new Peer Group, the composition of which is detailed later in this section.
Biggest changeThe graph assumes $100 was invested on June 11, 2019, and that all dividends were reinvested.
The timing, volume, and nature of share repurchases may be amended, suspended, or discontinued at any time. 25 Shareholder Return Performance The information under this caption "Shareholder Return Performance" in this Item 5 of this Annual Report on Form 10-K is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C under the Exchange Act, or to the liabilities of Section 18 of the Exchange Act and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.
The timing, volume, and nature of share repurchases may be amended, suspended, or discontinued at any time. 26 Shareholder Return Performance The information under this caption "Shareholder Return Performance" in this Item 5 of this Annual Report on Form 10-K is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C under the Exchange Act, or to the liabilities of Section 18 of the Exchange Act and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.
(2) Average price paid per share excludes costs associated with the repurchase. (3) On August 17, 2021, our Board of Directors approved a buyback of $400 million of ordinary shares and/or CHESS Depositary Instruments ("CDIs") during the following twelve months.
(2) Average price paid per share excludes costs associated with the repurchases. (3) On August 17, 2022, our Board of Directors approved a buyback of $400 million of ordinary shares and/or CHESS Depositary Instruments ("CDIs") during the following twelve months.
June 11, 2019 June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 Amcor plc $ 100.00 $ 102.77 $ 95.68 $ 111.82 $ 126.13 S&P 500 $ 100.00 $ 107.05 $ 115.08 $ 162.03 $ 144.83 S&P/ASX 200 $ 100.00 $ 102.08 $ 93.59 $ 131.41 $ 114.86 Peer Group $ 100.00 $ 100.12 $ 104.54 $ 124.79 $ 126.34 International Packaging Peer Group $ 100.00 $ 101.55 $ 91.28 $ 135.67 $ 114.23 26 The Peer Group consists of Ansell Limited, AptarGroup, Inc., Avery Dennison Corporation, Ball Corporation, Berry Global Group, Inc., Brambles Limited, Coles Group Limited, Conagra Brands Inc., Crown Holdings, Inc., Danone SA, General Mills Inc., Graphic Packaging Holding Co, Huhtamaki Oyj, International Paper Company, Johnson & Johnson, The Kraft Heinz Company, Mondelez International, Inc., Nestlé S.A., O-I Glass, Inc., Orora Limited, Pepsico, Inc., The Procter & Gamble Company, Sealed Air Corporation, Silgan Holdings Inc., Sonoco Products Company, Treasury Wine Estates Limited, Unilever PLC, Wesfarmers Limited, WestRock Company, and Woolworths Group Limited.
June 11, 2019 June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 June 30, 2023 Amcor plc $ 100.00 $ 102.77 $ 95.68 $ 111.82 $ 126.13 $ 105.72 S&P 500 $ 100.00 $ 107.05 $ 115.08 $ 162.03 $ 144.83 $ 173.21 S&P 500 Materials $ 100.00 $ 111.71 $ 110.47 $ 164.06 $ 149.75 $ 172.39 S&P/ASX 200 $ 100.00 $ 102.08 $ 93.59 $ 131.41 $ 114.86 $ 129.24 Peer Group $ 100.00 $ 100.12 $ 104.54 $ 124.79 $ 126.34 $ 133.70 27 The Peer Group consists of Ansell Limited, AptarGroup, Inc., Avery Dennison Corporation, Ball Corporation, Berry Global Group, Inc., Brambles Limited, Coles Group Limited, Conagra Brands Inc., Crown Holdings, Inc., Danone SA, General Mills Inc., Graphic Packaging Holding Co, Huhtamaki Oyj, International Paper Company, Johnson & Johnson, The Kraft Heinz Company, Mondelez International, Inc., Nestlé S.A., O-I Glass, Inc., Orora Limited, Pepsico, Inc., The Procter & Gamble Company, Sealed Air Corporation, Silgan Holdings Inc., Sonoco Products Company, Treasury Wine Estates Limited, Unilever PLC, Wesfarmers Limited, WestRock Company, and Woolworths Group Limited. 28
Share Repurchases Share repurchase activity during the three months ended June 30, 2022 was as follows (in millions, except number of shares, which are reflected in thousands, and per share amounts, which are expressed in U.S. dollars): Period Total Number of Shares Purchased (1) Average Price Paid Per Share (1)(2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs (3) April 1 - 30, 2022 — $ — — $ 178 May 1 - 31, 2022 11,324 12.62 10,324 45 June 1 - 30, 2022 3,423 13.24 3,423 — Total 14,747 $ 12.76 13,747 (1) Includes shares purchased on the open market to satisfy the vesting and exercises of share-based compensation awards.
Share Repurchases Share repurchase activity during the three months ended June 30, 2023, was as follows (in millions, except number of shares, which are reflected in thousands, and per share amounts, which are expressed in U.S. dollars): Period Total Number of Shares Purchased (1) Average Price Paid Per Share (1)(2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs (3) April 1 - 30, 2023 — $ — — $ 300 May 1 - 31, 2023 13,356 10.21 13,356 164 June 1 - 30, 2023 9,641 9.89 9,594 69 Total 22,997 $ 10.08 22,950 (1) Includes shares purchased on the open market to satisfy the vesting and exercises of share-based compensation awards.
The line graph below compares the annual percentage change in Amcor plc's cumulative total shareholder return on its ordinary shares with the cumulative total return of its Peer Group, International Packaging Peer Group, the S&P 500 Index, and the ASX 200 Index for the period beginning June 11, 2019.
The line graph below illustrates our cumulative total shareholder return on our ordinary shares as compared with the cumulative total return of our Peer Group, the S&P 500 Index, the S&P 500 Materials Index, and the ASX 200 Index for the period beginning June 11, 2019.
As of June 30, 2022, there w ere 105,788 registered holders of record of our ordinary shares and CDIs.
As of June 30, 2023, there were 104,752 registered holders of record of our ordinary shares and CDIs.
On August 17, 2022, our Board of Directors approved a further $400 million buyback of ordinary shares and/or CHESS Depositary Instruments ("CDIs") during the next twelve months.
Further, on February 7, 2023, our Board of Directors approved an additional buyback of up to $100 million of ordinary shares and CDIs during the next twelve months.
Removed
In addition, on February 1, 2022, our Board of Directors approved an additional $200 million buyback of ordinary shares and CDIs during the next twelve months. Both buyback programs have been completed as of June 30, 2022.
Removed
The Company believes that the new Peer Group provides investors with more relevant information about the Company's total shareholder return and relative performance against comparable companies both in Australia and internationally. As of June 30, 2022, the Company presents a transition total shareholder return graph that incorporates both Peer Group and International Packaging Peer Group.
Removed
The International Packaging Peer Group consists of AptarGroup, Inc., Ball Corporation, Berry Global Group, Inc., CCL Industries Inc., Crown Holdings, Inc., Graphic Packaging Holding Company, Huhtamaki Oyj, International Paper Company, Mayr-Melnhof Karton AG, O-I Glass, Inc., Sealed Air Corporation, Silgan Holdings Inc., Sonoco Products Company, and WestRock Company.
Removed
The International Packaging Peer Group has been replaced by the Peer Group and will not be published in future Annual Reports on Form 10-K. 27

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 47 Report of Independent Registered Public Accounting Firm (PCAOB ID 1358 ) 47 Consolidated Statements of Income 49 Consolidated Statements of Comprehensive Income 50 Consolidated Balance Sheets 51 Consolidated Statements of Cash Flows 52 Consolidated Statements of Equity 53 Notes to Consolidated Financial Statements 54
Biggest changeFinancial Statements and Supplementary Data 48 Report of Independent Registered Public Accounting Firm (PCAOB ID 1358 ) 48 Consolidated Statements of Income 50 Consolidated Statements of Comprehensive Income 51 Consolidated Balance Sheets 52 Consolidated Statements of Cash Flows 53 Consolidated Statements of Equity 54 Notes to Consolidated Financial Statements 55
Item 6. Removed and Reserved Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45 Item 8.
Item 6. Removed and Reserved Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

101 edited+30 added−37 removed23 unchanged
Biggest changeA reconciliation of reported net income attributable to Amcor plc to Adjusted EBIT from continuing operations and adjusted net income from continuing operations for fiscal years 2022, 2021, and 2020 is as follows: Years ended June 30, ($ in millions) 2022 2021 2020 Net income attributable to Amcor plc, as reported $ 805 $ 939 $ 612 Add: Net income attributable to non-controlling interests 10 12 4 Add: (Income)/loss from discontinued operations, net of tax — — 8 Income from continuing operations 815 951 624 Add: Income tax expense 300 261 187 Add: Interest expense 159 153 207 Less: Interest income (24) (14) (22) EBIT from continuing operations 1,250 1,351 996 Add: Material restructuring programs (1) 37 88 106 Add: Impairments in equity method investments (2) — — 26 Add: Material acquisition costs and other (3) 4 7 145 Add: Amortization of acquired intangible assets from business combinations (4) 163 165 191 Add: Impact of hyperinflation (5) 16 19 28 Add: Pension settlements (6) 8 — 5 Add/(Less): Net (gain)/loss on disposals (7) 10 (9) — Add: Property and other losses, net (8) 13 — — Add: Russia-Ukraine conflict impacts (9) 200 — — Adjusted EBIT from continuing operations 1,701 1,621 1,497 Less: Income tax expense (300) (261) (187) Less: Adjustments to income tax expense (10) (32) (51) (89) Less: Interest expense (159) (153) (207) Add: Interest income 24 14 22 Less: Material restructuring programs attributable to non-controlling interests — — (4) Less: Net income attributable to non-controlling interests (10) (12) (4) Adjusted net income from continuing operations $ 1,224 $ 1,158 $ 1,028 (1) Material restructuring programs includes restructuring and related expenses for the 2019 Bemis Integration Plan for fiscal year 2022 and 2018 Rigid Packaging Restructuring Plan and the 2019 Bemis Integration Plan for fiscal years 2021 and 2020.
Biggest changeA reconciliation of reported net income attributable to Amcor plc to Adjusted EBIT and adjusted net income for fiscal years 2023, 2022, and 2021 is as follows: Years ended June 30, ($ in millions) 2023 2022 2021 Net income attributable to Amcor plc, as reported $ 1,048 $ 805 $ 939 Add: Net income attributable to non-controlling interests 10 10 12 Net income 1,058 815 951 Add: Income tax expense 193 300 261 Add: Interest expense 290 159 153 Less: Interest income (31) (24) (14) EBIT 1,510 1,250 1,351 Add: 2018/2019 Restructuring programs (1) — 37 88 Add: Amortization of acquired intangible assets from business combinations (2) 160 163 165 Add: Impact of hyperinflation (3) 24 16 19 Add: Pension settlements (4) 5 8 — Add/(Less): Net (gain)/loss on disposals (5) — 10 (9) Add: Property and other losses, net (6) 2 13 — Add/(Less): Russia-Ukraine conflict impacts (7) (90) 200 — Add/(Less): Other (8) (3) 4 7 Adjusted EBIT 1,608 1,701 1,621 Less: Income tax expense (193) (300) (261) Less: Adjustments to income tax expense (9) (57) (32) (51) Less: Interest expense (290) (159) (153) Add: Interest income 31 24 14 Less: Net income attributable to non-controlling interests (10) (10) (12) Adjusted net income $ 1,089 $ 1,224 $ 1,158 (1) 2018/2019 Restructuring programs include restructuring and related expenses for the 2019 Bemis Integration Plan for fiscal year 2022, and 2018 Rigid Packaging Restructuring Plan and the 2019 Bemis Integration Plan for fiscal year 2021.
The gains or losses and prior service costs or credits that arise but are not recognized as components of pension cost are recorded as a component of other comprehensive income/(loss). Pension plan liabilities are revalued annually, or when an event occurs that requires remeasurement, based on updated assumptions and information about the individuals covered by the plan.
Gains or losses and prior service costs or credits that arise but are not recognized as components of pension cost are recorded as a component of other comprehensive income/(loss). Pension plan liabilities are revalued annually, or when an event occurs that requires remeasurement, based on updated assumptions and information about the individuals covered by the plan.
The current portion of long-term debt consists of debt amounts repayable within a year after the balance sheet date. 38 Our primary bank debt facilities and notes are unsecured and subject to negative pledge arrangements limiting the amount of secured indebtedness we can incur to 10.0% of our total tangible assets, subject to some exceptions and variations by facility.
The current portion of long-term debt consists of debt amounts repayable within a year after the balance sheet date. Our primary bank debt facilities and notes are unsecured and subject to negative pledge arrangements limiting the amount of secured indebtedness we can incur to 10.0% of our total tangible assets, subject to some exceptions and variations by facility.
Our estimates associated with the goodwill impairment tests are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value amounts, including projected future cash flows. Judgment is used in assessing whether goodwill should be tested more frequently for impairment than annually.
Our estimates associated with the goodwill impairment tests are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value amounts, including projected future cash flows. Judgment is also used in assessing whether goodwill should be tested more frequently for impairment than annually.
All goodwill is assigned to a reporting unit, which is defined as an operating segment, at the time of each acquisition based on the relative fair value of the reporting unit. We have six reporting units, of which five are included in our Flexibles Segment. The other reporting unit that is also a reportable segment is Rigid Packaging.
All goodwill is assigned to a reporting unit, which we have defined as an operating segment, based on the relative fair value of the reporting unit at the time of each acquisition. We have six reporting units, of which five are included in our Flexibles reportable segment. The other reporting unit, Rigid Packaging, is also a reportable segment.
In performing our impairment analysis, we may elect to first assess qualitative factors to determine whether a quantitative test is necessary. If we determine that a quantitative test is necessary, or elect to perform a quantitative test instead of the qualitative test, we derive an estimate of fair values for each of our reporting units using income approaches.
In our impairment analysis, we may elect to first assess qualitative factors to determine whether a quantitative test is necessary. If we determine that a quantitative test is necessary or elect to perform a quantitative test instead of the qualitative test, we derive an estimate of fair values for each of our reporting units using income approaches.
Our senior facilities are available to fund working capital, growth capital expenditures, and refinancing obligations and are provided to us by two bank syndicates. These facilities mature in April 2025 and April 2027, respectively, and the revolving tranches have two 12-month options available to management to extend the maturity date.
Our senior facilities are available to fund working capital, growth capital expenditures, and refinancing obligations and are provided to us by two bank syndicates. These facilities mature in April 2025 and April 2027, respectively, and the revolving tranches have two 12-month options available to extend the maturity date.
For our sponsored plans, the relevant accounting guidance requires that management make certain assumptions relating to the long-term rate of return on plan assets, discount rates used to determine the present value of future obligations and expenses, salary inflation rates, mortality rates, and other assumptions.
For our sponsored plans, the relevant accounting guidance requires management to make certain assumptions relating to the long-term rate of return on plan assets, discount rates used to determine the present value of future obligations and expenses, salary inflation rates, mortality rates, and other assumptions.
Short-term debt consists of bank debt with a duration of less than 12 months and bank overdrafts which are classified as current due to the short-term nature of the borrowings, except where we have the ability and intent to refinance and as such extend the debt beyond 12 months.
Short-term debt consists of bank debt with a duration of less than 12 months and bank overdrafts which are classified as current due to the short-term nature of the borrowings, except where we have the ability and intent to refinance and as such 39 extend the debt beyond 12 months.
We believe that the accounting estimates related to our pension plans are critical accounting estimates because they are highly susceptible to change from period to period based on the performance of plan assets, actuarial valuations, market conditions, and contracted benefit changes.
We believe the accounting estimates related to our pension plans are critical accounting estimates because they are highly susceptible to change from period to period based on the performance of plan assets, actuarial valuations, market conditions, and contracted benefit changes.
As part of this Plan, we have incurred $144 million in employee related expenses, $36 million in fixed asset related expenses, $39 million in other restructuring and $45 million in restructuring related expenses, partially offset by a gain on disposal of a business of $51 million.
As part of this Plan, we incurred $144 million in employee related expenses, $36 million in fixed asset related expenses, $39 million in other restructuring and $45 million in restructuring related expenses, partially offset by a gain on disposal of a business of $51 million.
Amcor Flexibles North America, Inc. is incorporated in Missouri in the United States, Amcor UK Finance plc is incorporated in England and Wales, United Kingdom, and the guarantors are incorporated under the laws of Jersey, Australia, the United States, and England and Wales and, therefore, insolvency proceedings with respect to the issuers and guarantors could proceed under, and be governed by, among others, Jersey, Australian, United States, or English insolvency law, as the case may be, if either issuer or any guarantor defaults on its obligations under the applicable Notes or Guarantees, respectively.
Amcor Flexibles North America, Inc. is incorporated in Missouri in the United States, Amcor UK Finance plc is incorporated in England and Wales, United Kingdom, Amcor Finance (USA), Inc. is incorporated in Delaware in the United States, and the guarantors are incorporated under the laws of Jersey, Australia, the United States, and England and Wales and, therefore, insolvency proceedings with respect to the issuers and guarantors could proceed under, and be governed by, among others, Jersey, Australian, United States, or English insolvency law, as the case may be, if either issuer or any guarantor defaults on its obligations under the applicable Notes or Guarantees, respectively.
In addition, the covenants of the bank debt facilities require us to maintain a leverage ratio not higher than 3.9 times. The negative pledge arrangements and the financial covenants are defined in the related debt agreements. As of June 30, 2022, we were in compliance with all applicable covenants under our bank debt facilities.
In addition, the covenants of the bank debt facilities require us to maintain a leverage ratio not higher than 3.9 times. The negative pledge arrangements and the financial covenants are defined in the related debt agreements. As of June 30, 2023, we were in compliance with all applicable covenants under our bank debt facilities.
Our long-term access to liquidity depends on both our results of operations and on the availability of funding in financial markets. 41 Critical Accounting Estimates and Judgments Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
Our long-term access to liquidity depends on both our results of operations and on the availability of funding in financial markets. 42 Critical Accounting Estimates and Judgments Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
The selection of assumptions is based on historical trends and known economic and market conditions at the time of valuation, as well as independent studies of trends performed by our actuaries. However, actual results may differ substantially from the estimates that were based on the critical assumptions.
The selection of assumptions is based on historical trends, known economic and market conditions at the time of valuation, and independent studies of trends performed by our actuaries. However, actual results may differ substantially from the estimates that were based on the critical assumptions.
The test for impairment requires us to make estimates about fair value, most of which are based on projected future cash flows and discount rates. These estimates and projections require judgments as to future events, conditions, and amounts of future cash flows.
The impairment test requires us to make estimates about fair value, most of which are based on projected future cash flows and discount rates. These estimates and projections require judgments about future events, conditions, and amounts of future cash flows.
The 2019 Bemis Integration Plan was completed by June 30, 2022, with final pre-tax integration cost amounting to $253 million. The total 2019 Bemis Integration Plan cost includes $213 million of restructuring and related expenses, net, and $40 million of general integration expenses.
The 2019 Bemis Integration Plan was completed by June 30, 2022, with final pre-tax integration cost amounting to $253 million. The total 2019 Bemis Integration Plan cost included $213 million of restructuring and related expenses, net, and $40 million of general integration expenses.
The following guidelines are used to manage our liquidity risk: • maintaining minimum undrawn committed liquidity of at least $200 million that can be drawn at short notice; • regularly performing a comprehensive analysis of all cash inflows and outflows in relation to operational, investing, and financing activities; • generally using tradable instruments only in highly liquid markets; • maintaining a senior credit investment grade rating with a reputable independent rating agency; • managing credit risk related to financial assets; • monitoring the duration of long-term debt; • only investing surplus cash with major financial institutions; and • to the extent practicable, spreading the maturity dates of long-term debt facilities.
The following guidelines are used to manage our liquidity risk: • maintaining minimum undrawn committed liquidity of at least $200 million that can be drawn at short notice; • regularly performing a comprehensive analysis of all cash inflows and outflows in relation to operational, investing, and financing activities; • generally using tradable instruments only in highly liquid markets; • maintaining a senior credit investment grade rating with a reputable independent rating agency; • managing credit risk related to financial assets; • monitoring the duration of long-term debt; • only investing surplus cash with major financial institutions or well diversified money market funds; and • to the extent practicable, spreading the maturity dates of long-term debt facilities.
These amounts reflect material cash requirements for which we are contractually committed. • Debt obligations: Refer to Note 14, “Debt” of the notes to consolidated financial statements for additional information about our debt obligations and the related timing of these expected payments. • Interest payments: Refer to Note 14, “Debt” of the notes to consolidated financial statements for additional information about our interest payments and the related timing of the expected payments. • Operating and finance leases: Refer to Note 15, “Leases” of the notes to consolidated financial statements for information about our lease obligations and the related timing of the expected payments. • Employee benefit plan obligations: Refer to Note 13, “Pension and Other Post-Retirement Plans” of the notes to consolidated financial statements for additional information about our employee benefit plan obligations and the related timing of the expected payments. • Capital expenditures: As of June 30, 2022, we have $223 million in committed capital expenditures for the fiscal year 2023. • Other purchase obligations: Amcor has other purchase obligations, including commitments to purchase a specified minimum amount of goods, inclusive of raw materials, utilities, and other.
These amounts reflect material cash requirements for which we are contractually committed. • Debt obligations: Refer to Note 14, “Debt” of the notes to consolidated financial statements for additional information about our debt obligations and the related timing of these expected payments. • Interest payments: Refer to Note 14, “Debt” of the notes to consolidated financial statements for additional information about our interest payments and the related timing of the expected payments. • Operating and finance leases: Refer to Note 15, “Leases” of the notes to consolidated financial statements for information about our lease obligations and the related timing of the expected payments. • Employee benefit plan obligations: Refer to Note 13, “Pension Plans” of the notes to consolidated financial statements for additional information about our employee benefit plan obligations and the related timing of the expected payments. • Capital expenditures: As of June 30, 2023, we have $249 million in committed capital expenditures for the fiscal year 2024. • Other purchase obligations: Amcor has other purchase obligations, including commitments to purchase a specified minimum amount of goods, inclusive of raw materials, utilities, and other.
The most significant assumptions used in the determination of the estimated fair value of the reporting units are revenue growth, projected operating income growth, terminal values, and discount rates.
The most significant assumptions used in the determination of the estimated fair value of the reporting units are revenue growth, projected operating income growth, market multiples, terminal values, and discount rates.
Additionally, we are also required to assess the likelihood of recovering deferred tax assets against future sources of taxable income which might result in the need for a valuation allowance on deferred tax assets, including operating loss, capital loss, and tax credit carryforwards if we do not reach 43 the more likely than not threshold based on all available evidence.
Additionally, we are required to assess the likelihood of recovering deferred tax assets against future sources of taxable income which may result in the need for a valuation allowance on deferred tax assets, including operating loss, capital loss, and tax credit carryforwards if we do not reach the more likely than not threshold based on all available evidence.
However, such programs are backstopped by committed bank syndicated loan facilities with maturities in April 2025 ($1.9 billion), and April 2027 ($1.9 billion), with an option to extend, under which we had $1.4 billion in unused capacity remaining as of June 30, 2022. 40 We expect long-term future funding needs to primarily relate to refinancing and servicing our outstanding financial liabilities maturing as outlined above and to finance our capital expenditure and payments for acquisitions that may be completed.
However, such programs are backstopped by committed bank syndicated loan facilities with maturities in April 2025 ($1.9 billion), and April 2027 ($1.9 billion), with an option to extend, under which we had $1.3 billion in unused capacity remaining as of June 30, 2023. 41 We expect long-term future funding needs to primarily relate to refinancing and servicing our outstanding financial liabilities maturing as outlined above and to finance our capital expenditure and payments for acquisitions that may be completed.
These measures exclude the impact of significant tax reforms, certain amounts related to the effect of changes in currency exchange rates, acquisitions, and restructuring, including employee-related costs, equipment relocation costs, accelerated depreciation, and the write-down of equipment.
These measures exclude the impact of certain amounts related to the effect of changes in currency exchange rates, acquisitions, and restructuring, including employee related costs, equipment relocation costs, accelerated depreciation, and the write-down of equipment.
These measures also exclude gains or losses on sales of significant property and divestitures, significant property and other impairments, net of insurance recovery, certain litigation matters, significant pension settlements, impairments in goodwill and equity method investments, and certain acquisition-related expenses, including transaction expenses, due diligence expenses, professional and legal fees, purchase accounting adjustments for inventory, order backlog, intangible amortization, changes in the fair value of deferred acquisition payments, and impacts related to the Russia-Ukraine conflict.
These measures also exclude gains or losses on sales of significant property and divestitures, significant property and other impairments, net of insurance recovery, certain regulatory and litigation matters, significant pension settlements, impairments in goodwill and equity method investments, and certain acquisition-related expenses, including transaction and integration expenses, due diligence expenses, professional and legal fees, purchase accounting adjustments for inventory, order backlog, intangible amortization, changes in the fair value of deferred acquisition payments and economic hedging instruments on commercial paper, and impacts related to the Russia-Ukraine conflict.
We had cash outflows of $143 million, $8 million, and $67 million for the purchase of our shares in the open market during fiscal years 2022, 2021, and 2020, respectively, as treasury shares to satisfy the vesting and exercises of share-based compensation awards.
We had cash outflows of $221 million, $143 million, and $8 million for the purchase of our shares in the open market during fiscal years 2023, 2022, and 2021, respectively, as treasury shares to satisfy the vesting and exercises of share-based compensation awards.
As of June 30, 2022, the revolving senior bank debt facilities had an aggregate limit of $3.8 billion, of which $2.4 billion had been drawn (inclusive of amounts drawn under commercial paper programs reducing the overall balance of available senior facilities).
As of June 30, 2023, the revolving senior bank debt facilities had an aggregate limit of $3.8 billion, of which $2.5 billion had been drawn (inclusive of amounts drawn under commercial paper programs reducing the overall balance of available senior facilities).
As of June 30, 2018, the Argentine economy was designated as highly inflationary for accounting purposes. Accordingly, beginning July 1, 2018, we began reporting the financial results of our Argentine subsidiaries with a functional currency of the U.S. dollar.
As of June 30, 2018, the Argentine economy was designated as highly inflationary for accounting purposes. Accordingly, beginning July 1, 2018, we began reporting the financial results of our Argentine subsidiaries with a functional currency of the Argentine Peso at the functional currency of the parent, which is the U.S. dollar.
Intangible assets consist primarily of purchased customer relationships, technology, trademarks, and software and are amortized using the straight-line method over their estimated useful lives, which range from one to 20 years. We review these intangible assets for impairment as changes in circumstances or the occurrence of events suggest that the remaining value is not recoverable.
Intangible assets consist primarily of purchased customer relationships, technology, trademarks, and software and are amortized using the straight-line method over their estimated useful lives, ranging from one to twenty years. We review these intangible assets for impairment when changes in circumstances or the occurrence of events suggest that the remaining value is not recoverable.
Pension Costs Approximately 90% of our principal defined benefit plans are closed to new entrants and future accruals. The accounting for defined benefit pension plans requires us to recognize the overfunded or underfunded status of the pension plans on our balance sheet.
Pensions The majority of our principal defined benefit plans are closed to new entrants and future accruals. The accounting for defined benefit pension plans requires us to recognize the overfunded or underfunded status of the pension plans on our balance sheet.
A discussion and analysis regarding our results of operations for fiscal year 2021 compared to fiscal year 2020 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, filed with the SEC on August 24, 2021 and incorporated by reference.
A discussion and analysis regarding our results of operations for fiscal year 2022, compared to fiscal year 2021 that are not included in this Annual Report on Form 10-K can be fo und in Part II, Item 7 of ou r Annual Report on Form 10-K for the fiscal year ended June 30, 2022, filed with the SEC on August 18, 2022 and incorporated by reference.
Accumulated actuarial gains and losses in excess of a 10 percent corridor and the prior service cost are amortized on a straight-line basis from the date recognized over the average remaining service period of active participants or over the average life expectancy for plans with significant inactive participants. The service costs related to defined benefits are included in operating income.
Accumulated actuarial gains and losses in excess of a 10 percent corridor and the prior service cost are amortized on a straight-line basis from the date recognized over the average remaining service period of active participants or over the average life expectancy for plans with significant inactive participants.
We expect net periodic pension cost before the effect of income taxes for fiscal year 2023 to be approximately $9 million.
We expect net periodic pension cost before the effect of income taxes for fiscal year 2024 to be approximately $11 million.
The net cash expenditures for the plan, including disposal proceeds, are $170 million, of which $40 million relates to general integration expenses.
The net cash expenditures for the plan, including disposal proceeds, were $170 million, of which $40 million related to general integration expenses.
A substantial portion of our pension amounts relates to our defined benefit plans in the United States, Switzerland, and the United Kingdom. Net periodic pension cost recorded in fiscal year 2022 was $12 million, compared to pension cost of $15 million in fiscal year 2021 and $10 million in fiscal year 2020.
A significant portion of our pension amounts relates to our defined benefit plans in the United States, Switzerland, United Kingdom, and Germany. The net periodic pension cost recorded in fiscal year 2023 was $11 million, compared to net periodic pension cost of $12 million in fiscal year 2022 and $15 million in fiscal year 2021.
Goodwill is not amortized but is instead tested annually or when events and circumstances indicate an impairment may have occurred. Our reporting units each contain goodwill that is assessed for potential impairment.
Goodwill is not amortized but is instead tested for impairment annually in the fourth quarter of each fiscal year, or when events and circumstances indicate an impairment may have occurred. Our reporting units each contain goodwill that is assessed for potential impairment.
The estimated future cash outlays are approximately $1.6 billion, $550 million, $500 million, $300 million, and $100 million in fiscal years 2023, 2024, 2025, 2026, and 2027, respectively. Off-Balance Sheet Arrangements Other than as described under "Material Cash Requirements" as of June 30, 2022, we had no significant off-balance sheet contractual obligations or other commitments.
The estimated future cash outlays are approximatel y $1.1 billion, $450 million, $250 million, $100 million, and $100 million in fiscal years 2024, 2025, 2026, 2027, and 2028, respectively. Off-Balance Sheet Arrangements Other than as described under "Material Cash Requirements" as of June 30, 2023, we had no significant off-balance sheet contractual obligations or other commitments.
Our net debt as of June 30, 2022 and June 30, 2021 was $5.7 billion and $5.4 billion, respectively. Available Financing As of June 30, 2022, we had undrawn credit facilities available in the amount of $1.4 billion.
Our net debt as of June 30, 2023, and June 30, 2022 was $6.1 billion and $5.7 billion, respectively. Debt Facilities and Refinancing As of June 30, 2023, we had undrawn credit facilities available in the amount of $1.3 billion.
The ultimate near-term impact of the pandemic on our business will depend on the extent and nature of any future disruptions across the supply chain, the implementation of further social distancing measures and other government-imposed restrictions, as well as the nature and pace of macroeconomic recovery in key global economies.
The impact of any future pandemics or regional health crises on our business will depend on the extent and nature of any future disruptions across the supply chain, the implementation of social distancing measures and other government-imposed restrictions, as well as the nature and pace of macroeconomic recovery in key global economies.
The amount by which the fair value of plan assets differs from the projected benefit obligation of a pension plan must be recorded on the consolidated balance sheets as an asset, in the case of an overfunded plan, or as a liability, in the case of an underfunded plan.
The difference between the fair value of plan assets and the projected benefit obligation of a pension plan must be recorded on the consolidated balance sheets as an asset, in the case of an overfunded plan, or as a liability, in the case of an underfunded plan.
As of June 30, 2022, 2021, and 2020, we held treasury shares at cost of $18 million, $29 million, and $67 million, representing 2 million, 3 million, and 7 million shares, respectively. 39 Material Cash Requirements Amcor’s material cash requirements for future periods from known contractual obligations are included below.
As of June 30, 2023, 2022, and 2021, we held treasury shares at cost of $12 million, $18 million, and $29 million, representing 1 million, 2 million, and 3 million shares, respectively. 40 Material Cash Requirements Our material cash requirements for future periods from known contractual obligations are included below.
Set forth below is the summarized financial information of the combined Obligor Group made up of Amcor plc (as parent guarantor), Amcor Flexibles North America, Inc. and Amcor UK Finance plc (as subsidiary issuers of the notes and guarantors of each other’s notes), and Amcor Finance (USA), Inc. and Amcor Pty Ltd (as the remaining subsidiary guarantors). 36 Basis of Preparation The following summarized financial information is presented for the parent, issuer, and guarantor subsidiaries ("Obligor Group") on a combined basis after elimination of intercompany transactions between entities in the combined group and amounts related to investments in any subsidiary that is a non-guarantor.
(as subsidiary issuers of the notes and guarantors of each other’s notes), and Amcor Pty Ltd (as the remaining subsidiary guarantor). 37 Basis of Preparation The following summarized financial information is presented for the parent, issuer, and guarantor subsidiaries ("Obligor Group") on a combined basis after elimination of intercompany transactions between entities in the combined group and amounts related to investments in any subsidiary that is a non-guarantor.
The increase was predominantly attributable to an increase in tax provisions for uncertain tax positions. 33 Presentation of Non-GAAP Information This Annual Report on Form 10-K refers to non-GAAP financial measures: adjusted earnings before interest and taxes ("Adjusted EBIT"), adjusted net income, and net debt.
The decrease was predominantly attributable to a decrease in tax provisions for uncertain tax positions and a non-taxable capital gain on the sale of the Russian business. 34 Presentation of Non-GAAP Information This Annual Report on Form 10-K refers to non-GAAP financial measures: adjusted earnings before interest and taxes ("Adjusted EBIT"), earnings before interest and tax ("EBIT"), adjusted net income, and net debt.
(8) Property and other losses, net includes property and related business losses primarily associated with the destruction of our Durban, South Africa facility during general civil unrest in July 2021, net of insurance recovery.
Fiscal year 2022 includes business losses primarily associated with the destruction of our Durban, South Africa facility during general civil unrest in July 2021, net of insurance recovery.
The determination of uncertain tax positions is based on an evaluation of whether the weight of available evidence indicates that it is more likely than not that the position taken or expected to be taken in the tax return will be sustained on tax audit, including resolution of related appeals or litigation processes, if any.
Determining uncertain tax positions involves evaluating whether the weight of available positive and negative evidence indicates that it is more likely than not that the position taken or expected to be taken in the tax return will be sustained upon tax audit, including resolution of related appeals or litigation processes, if any.
Reconciliation of Net Debt A reconciliation of total debt to net debt at June 30, 2022 and 2021 is as follows: ($ in millions) June 30, 2022 June 30, 2021 Current portion of long-term debt $ 14 $ 5 Short-term debt 136 98 Long-term debt, less current portion 6,340 6,186 Total debt 6,490 6,289 Less cash and cash equivalents 775 850 Net debt $ 5,715 $ 5,439 35 Supplemental Guarantor Information Amcor plc, along with certain wholly owned subsidiary guarantors, guarantee the following senior notes issued by the wholly owned subsidiaries, Amcor Flexibles North America, Inc. and Amcor UK Finance plc. • 4.000% Guaranteed Senior Notes due 2025 of Amcor Flexibles North America, Inc. • 3.100% Guaranteed Senior Notes due 2026 of Amcor Flexibles North America, Inc. • 3.625% Guaranteed Senior Notes due 2026 of Amcor Flexibles North America, Inc. • 4.500% Guaranteed Senior Notes due 2028 of Amcor Flexibles North America, Inc. • 2.630% Guaranteed Senior Notes due 2030 of Amcor Flexibles North America, Inc. • 2.690% Guaranteed Senior Notes due 2031 of Amcor Flexibles North America, Inc. • 1.125% Guaranteed Senior Notes due 2027 of Amcor UK Finance plc The six notes issued by Amcor Flexibles North America, Inc. are guaranteed by its parent entity Amcor plc and the subsidiary guarantors Amcor Pty Ltd, Amcor Finance (USA), Inc., and Amcor UK Finance plc.
Reconciliation of Net Debt A reconciliation of total debt to net debt at June 30, 2023 and 2022 is as follows: ($ in millions) June 30, 2023 June 30, 2022 Current portion of long-term debt $ 13 $ 14 Short-term debt 80 136 Long-term debt, less current portion 6,653 6,340 Total debt 6,746 6,490 Less cash and cash equivalents 689 775 Net debt $ 6,057 $ 5,715 36 Supplemental Guarantor Information Amcor plc, along with certain wholly owned subsidiary guarantors, guarantee the following senior notes issued by the wholly owned subsidiaries, Amcor Flexibles North America, Inc., Amcor UK Finance plc, and Amcor Finance (USA), Inc. • $500 million, 4.000% Guaranteed Senior Notes due 2025 of Amcor Flexibles North America, Inc. • $300 million, 3.100% Guaranteed Senior Notes due 2026 of Amcor Flexibles North America, Inc. • $600 million, 3.625% Guaranteed Senior Notes due 2026 of Amcor Flexibles North America, Inc. • $500 million, 4.500% Guaranteed Senior Notes due 2028 of Amcor Flexibles North America, Inc. • $500 million, 2.630% Guaranteed Senior Notes due 2030 of Amcor Flexibles North America, Inc. • $800 million, 2.690% Guaranteed Senior Notes due 2031 of Amcor Flexibles North America, Inc. • €500 million, 1.125% Guaranteed Senior Notes due 2027 of Amcor UK Finance plc • $500 million, 5.625% Guaranteed Senior Notes due 2033 of Amcor Finance (USA), Inc.
Factors such as a significant decrease in expected net earnings, adverse equity market conditions, and other external events, such as the COVID-19 pandemic and the Russia-Ukraine conflict, may result in the need for more frequent assessments.
Factors such as a significant decrease in expected net earnings, adverse equity market conditions, and other external events, such as significant inflation and rising interest rates, may result in the need for more frequent assessments.
Diluted earnings per share ("Diluted EPS") decreased by $0.073, or by 12.1%, in fiscal year 2022, compared to fiscal year 2021, with net income attributable to ordinary shareholders decreasing by 14.3% and the diluted weighted-average number of shares outstanding decreasing by 2.6%.
Diluted earnings per share ("Diluted EPS") increased by $0.176, or 33%, in fiscal year 2023, compared to fiscal year 2022, with net income attributable to ordinary shareholders increasing by 30% and the diluted weighted-average number of shares outstanding decreasing by 3%.
Two Year Review of Results (in millions) 2022 2021 Net sales $ 14,544 100.0 % $ 12,861 100.0 % Cost of sales (11,724) (80.6) (10,129) (78.8) Gross profit 2,820 19.4 2,732 21.2 Operating expenses: Selling, general, and administrative expenses (1,284) (8.8) (1,292) (10.0) Research and development expenses (96) (0.7) (100) (0.8) Restructuring, impairment, and related expenses, net (234) (1.6) (94) (0.7) Other income, net 33 0.2 75 0.6 Operating income 1,239 8.5 1,321 10.3 Interest income 24 0.2 14 0.1 Interest expense (159) (1.1) (153) (1.2) Other non-operating income, net 11 0.1 11 0.1 Income from continuing operations before income taxes and equity in income/(loss) of affiliated companies 1,115 7.7 1,193 9.3 Income tax expense (300) (2.1) (261) (2.0) Equity in income/(loss) of affiliated companies, net of tax — — 19 0.1 Net income $ 815 5.6 % $ 951 7.4 % Net income attributable to non-controlling interests (10) (0.1) (12) (0.1) Net income attributable to Amcor plc $ 805 5.5 % $ 939 7.3 % 28 Overview Amcor is a global leader in developing and producing responsible packaging for food, beverage, pharmaceutical, medical, home and personal-care, and other products.
Two Year Review of Results (in millions) 2023 2022 Net sales $ 14,694 100.0 % $ 14,544 100.0 % Cost of sales (11,969) (81.5) (11,724) (80.6) Gross profit 2,725 18.5 2,820 19.4 Operating expenses: Selling, general, and administrative expenses (1,246) (8.5) (1,284) (8.8) Research and development expenses (101) (0.7) (96) (0.7) Restructuring, impairment, and other related activities, net 104 0.7 (234) (1.6) Other income, net 26 0.2 33 0.2 Operating income 1,508 10.3 1,239 8.5 Interest income 31 0.2 24 0.2 Interest expense (290) (2.0) (159) (1.1) Other non-operating income, net 2 — 11 0.1 Income before income taxes 1,251 8.5 1,115 7.7 Income tax expense (193) (1.3) (300) (2.1) Net income $ 1,058 7.2 % $ 815 5.6 % Net income attributable to non-controlling interests (10) (0.1) (10) (0.1) Net income attributable to Amcor plc $ 1,048 7.1 % $ 805 5.5 % 29 Overview Amcor is a global leader in developing and producing responsible packaging for food, beverage, pharmaceutical, medical, home and personal-care, and other products.
Adjusted EBIT decreased by $10 million, or by 3.3%, in fiscal year 2022, compared to fiscal year 2021.
Adjusted EBIT decreased by $24 million, or 8%, in fiscal year 2023, compared to fiscal year 2022.
Statement of Income for Obligor Group (in millions) For the year ended June 30, 2022 Net sales - external $ 1,092 Net sales - to subsidiaries outside the Obligor Group 11 Total net sales $ 1,103 Gross profit 190 Net income (1) $ 399 Net income attributable to non-controlling interests — Net income attributable to Obligor Group $ 399 (1) Includes $648 million of net intercompany income mainly attributable to intercompany dividends and intercompany interest income.
Statement of Income for Obligor Group (in millions) For the year ended June 30, 2023 Net sales - external $ 1,065 Net sales - to subsidiaries outside the Obligor Group 6 Total net sales $ 1,071 Gross profit 187 Net income (1) $ 1,583 Net income attributable to non-controlling interests — Net income attributable to Obligor Group $ 1,583 (1) Includes $1,993 million net intercompany income from Amcor entities from outside the Obligor Group, mainly attributable to intercompany dividends and intercompany interest income.
If actual results differ from these estimates or there are future changes to tax laws or statutory tax rates, we may need to adjust valuation allowances or tax liabilities, which could have a material impact on our consolidated financial position and results of operations.
If actual results differ from these estimates or if there are future changes in tax laws or statutory tax rates, we may need to adjust valuation allowances, or deferred tax liabilities, which could have a material impact on our consolidated financial position and results of operations. 44 Valuation of Assets and Liabilities Held for Sale Disposal groups held for sale are assessed for impairment by comparing their fair values, less cost to sell, to their carrying values.
New Accounting Pronouncements Refer to Note 3, "New Accounting Guidance" of the notes to consolidated financial statements for information about new accounting pronouncements. 44
Refer to Note 5, "Acquisitions and Divestitures," and Note 6, " Held for Sale." New Accounting Pronouncements Refer to Note 3, "New Accounting Guidance," of the notes to consolidated financial statements for information about new accounting pronouncements. 45
The recognized tax benefits are measured as the largest benefit of having a more likely than not likelihood of being sustained upon settlement. Significant estimates are required in determining such uncertain tax positions and related income tax expense and benefit.
The recognized tax benefits are measured as the largest benefit of having a more likely than not likelihood of being sustained upon settlement.
Consolidated Restructuring, Impairment, and Related Expenses, Net ($ in millions) 2022 2021 Restructuring, impairment, and related expenses, net $ (234) $ (94) Restructuring, impairment, and related expenses, net, as a percentage of net sales (1.6) % (0.7) % Restructuring, impairment, and related costs increased by $140 million, or by 148.9%, in fiscal year 2022, compared to fiscal year 2021.
Consolidated Restructuring, Impairment and Other Related Activities, Net ($ in millions) 2023 2022 Restructuring, impairment, and other related activities, net $ 104 $ (234) Restructuring, impairment, and other related activities, net, as a percentage of net sales 0.7 % (1.6) % Restructuring, impairment, and other related activities, net decreased by $338 million, or 144%, in fiscal year 2023, compared to fiscal year 2022.
Overview Year Ended June 30, ($ in millions) 2022 2021 Net cash provided by operating activities $ 1,526 $ 1,461 Net cash (used in)/provided by investing activities (527) (233) Net cash used in financing activities (891) (1,179) Cash Flow Overview Net Cash Provided by Operating Activities Net cash inflows provided by operating activities increased by $65 million, or by 4%, in fiscal year 2022, compared to fiscal year 2021.
Overview Year Ended June 30, ($ in millions) 2023 2022 Net cash provided by operating activities $ 1,261 $ 1,526 Net cash used in investing activities (309) (527) Net cash used in financing activities (1,025) (891) Cash Flow Overview Net Cash Provided by Operating Activities Net cash provided by operating activities decreased by $265 million in fiscal year 2023, compared to fiscal year 2022.
The decrease in the diluted weighted-average number of shares outstanding was due to repurchase of shares under announced share buyback programs. Segment Results of Operations Flexibles Segment The Flexibles reportable segment develops and supplies flexible packaging globally.
The decrease in the diluted weighted-average number of shares outstanding was due to the repurchase of shares under announced share buyback programs.
Adjusted earnings before interest and tax from continuing operations ("Adjusted EBIT") increased by $90 million, or by 6.3% in fiscal year 2022, compared to fiscal year 2021.
Adjusted earnings before interest and tax ("Adjusted EBIT") decreased by $88 million, or 6% in fiscal year 2023, compared to fiscal year 2022.
During the fiscal year ended June 30, 2022, we repurchased approximately $600 million, excluding transaction costs, or 49 million shares. The shares repurchased were canceled upon repurchase. Additionally, on August 17, 2022, our Board of Directors approved a further $400 million buyback of ordinary shares and/or CDIs in the next twelve months.
Further, on February 7, 2023, our Board of Directors approved an additional buyback of up to $100 million of ordinary shares and/or CDIs in the following twelve months. During the fiscal year ended June 30, 2023, we repurchased approximately $431 million, excluding transaction costs, or 41 million shares. The shares repurchased were canceled upon repurchase.
Discount Rate Total Increase (Decrease) to Pension Expense from Current Assumption Rate of Return on Plan Assets Total Increase (Decrease) to Pension Expense from Current Assumption (in $ millions) (in $ millions) +25 basis points 1 +25 basis points (3) 3.80 percent (current assumption) — 4.42 percent (current assumption) — -25 basis points (1) -25 basis points 3 Intangible Assets and Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of net assets acquired, including intangible assets.
Pension Assumptions Sensitivity Analysis The following chart depicts the sensitivity of estimated fiscal year 2024 pension expense to incremental changes in the weighted average discount rate and expected long-term rate of return on assets. 43 Discount Rate Total Increase/(Decrease) to Pension Expense from Current Assumption Rate of Return on Plan Assets Total Increase/ (Decrease) to Pension Expense from Current Assumption (in $ millions) (in $ millions) +25 basis points 1 +25 basis points (3) 4.26 percent (current assumption) — 5.47 percent (current assumption) — -25 basis points (1) -25 basis points 3 Goodwill and Other Intangible Assets Goodwill represents the excess of the aggregate purchase price over the fair value of net assets acquired, including intangible assets.
This decrease is primarily due to higher cash net debt drawdowns compared with fiscal year 2021, partially offset by higher share buybacks and on-market purchases of own shares in fiscal year 2022. Net Debt We borrow from financial institutions and debt investors in the form of bank overdrafts, bank loans, corporate bonds, unsecured notes, and commercial paper.
The change is primarily due to lower net debt drawdowns, partially offset by lower share buybacks in the current period as compared to the prior period. Net Debt We borrow from financial institutions and debt investors in the form of bank overdrafts, bank loans, corporate bonds, unsecured notes, and commercial paper.
Gross profit as a percentage of sales decreased to 19.4% for the fiscal year 2022, primarily due to the impact on the calculation from the pass through of higher raw material costs during the period.
Gross profit as a percentage of sales decreased to 18.5% in fiscal year 2023, mainly from the impact on the calculation from the pass-through of higher raw material costs during the current fiscal period and the impact of disposed operations.
(7) Net (gain)/loss on disposals includes an expense of $10 million from the disposal of non-core assets for fiscal year 2022. Refer to Note 11, "Fair Value Measurements," for more information. Fiscal year 2021 includes the gain realized upon the disposal of AMVIG and the loss upon disposal of other non-core businesses not part of material restructuring programs.
(5) Net (gain)/loss on disposals, excluding the disposal of our Russian business, includes an expense of $10 million from the disposal of non-core assets in fiscal year 2022. Refer to Note 11, "Fair Value Measurements," for more information.
Balance Sheet for Obligor Group (in millions) As of June 30, 2022 Assets Current assets - external $ 1,254 Current assets - due from subsidiaries outside the Obligor Group 83 Total current assets 1,337 Non-current assets - external 1,396 Non-current assets - due from subsidiaries outside the Obligor Group 10,978 Total non-current assets 12,374 Total assets $ 13,711 Liabilities Current liabilities - external $ 2,014 Current liabilities - due to subsidiaries outside the Obligor Group 23 Total current liabilities 2,037 Non-current liabilities - external 6,456 Non-current liabilities - due to subsidiaries outside the Obligor Group 11,255 Total non-current liabilities 17,711 Total liabilities $ 19,748 37 Liquidity and Capital Resources We finance our business primarily through cash flows provided by operating activities, borrowings from banks, and proceeds from issuances of debt and equity.
Balance Sheet for Obligor Group (in millions) As of June 30, 2023 Assets Current assets - external $ 1,184 Current assets - due from subsidiaries outside the Obligor Group 190 Total current assets 1,374 Non-current assets - external 1,415 Non-current assets - due from subsidiaries outside the Obligor Group 10,992 Total non-current assets 12,407 Total assets $ 13,781 Liabilities Current liabilities - external $ 1,912 Current liabilities - due to subsidiaries outside the Obligor Group 37 Total current liabilities 1,949 Non-current liabilities - external 6,801 Non-current liabilities - due to subsidiaries outside the Obligor Group 9,917 Total non-current liabilities 16,718 Total liabilities $ 18,667 38 Liquidity and Capital Resources We finance our business primarily through cash flows provided by operating activities, borrowings from banks, and proceeds from issuances of debt and equity.
Consolidated Selling, General, and Administrative ("SG&A") Expenses ($ in millions) 2022 2021 SG&A expenses $ (1,284) $ (1,292) SG&A expenses as a percentage of net sales (8.8) % (10.0) % SG&A decreased by $8 million, or by 0.6%, in fiscal year 2022, compared to fiscal year 2021, largely driven by favorable exchange rates.
Consolidated Selling, General, and Administrative ("SG&A") Expenses ($ in millions) 2023 2022 SG&A expenses $ (1,246) $ (1,284) SG&A expenses as a percentage of net sales (8.5) % (8.8) % SG&A decreased by $38 million, or 3%, in fiscal year 2023, compared to fiscal year 2022. The decrease was primarily driven by exchange rate movements.
(9) Russia-Ukraine conflict impacts include $138 million of impairment charges, $57 million of restructuring and related expenses, and $5 million of other expenses for fiscal year 2022. Refer to Note 4,"Restructuring, Impairment, and Related Expenses, Net," and Note 7, "Restructuring," for further information. (10) Net tax impact on items (1) through (9) above.
Fiscal year 2022 includes $138 million of impairment charges, $57 million of restructuring and related expenses, and $5 million of other expenses. Refer to Note 4, "Restructuring, Impairment, and Other Related Activities, Net," and Note 7, "Restructuring," for further information.
Share Repurchases On August 17, 2021, our Board of Directors approved a $400 million buyback of ordinary shares and CHESS Depositary Instruments ("CDIs"). In addition, on February 1, 2022, our Board of Directors approved an additional $200 million buyback of ordinary shares and CDIs.
Share Repurchases On August 17, 2022, our Board of Directors approved a $400 million buyback of ordinary shares and/or CHESS Depositary Instruments ("CDIs") and this program has been completed in fiscal year 2023.
Excluding the impact of disposed and ceased operations of $87 million, or (0.7%), negative currency impacts of $249 million, or (1.9%), and pass-through of raw material costs of $1,530 million, or 11.9%, the increase in net sales for the fiscal year 2022 was $490 million or 3.8%, driven by marginally favorable volumes of 0.4% and favorable price/mix of 3.4%.
Excluding the pass-through of higher raw material costs of $516 million, negative currency impacts of $404 million, and the negative impact of disposed and ceased operations of $207 million, the remaining variation in net sales for the fiscal year 2023 was an increase of $98 million, or 1%, reflecting favorable price/mix of 4%, and unfavorable volumes of (3%).
We have a mixture of fixed and floating interest rates and use interest rate swaps to provide further flexibility in managing the interest cost of borrowings.
We have a mixture of fixed and floating interest rates and use interest rate swaps to provide further flexibility in managing the interest cost of borrowings. At the end of October 2022, we entered into two interest rate swap contracts for a total notional amount of $1.25 billion.
The discount rate used at each measurement date is set based on a high-quality corporate bond yield curve, derived based on bond universe information sourced from reputable third-party indexes, data providers, and rating agencies. In countries where there is no deep market in corporate bonds, we have used a government bond approach to set the discount rate.
We review annually the discount rates used to calculate the present value of pension plan liabilities. The discount rates used at each measurement date is determined based on a high-quality corporate bond yield curve, derived based on bond universe information sourced from reputable third-party indexes, data providers, and rating agencies.
However, the fair value that is ultimately realized upon the divestiture of a business may significantly differ from the estimated fair value recognized in our consolidated financial statements, especially for disposal groups located within countries at war.
We consider historical experience, guidance received from third parties, and all information available at the time the estimates are made to derive fair value. However, the fair value that is ultimately realized upon the divestiture of a business may significantly differ from the estimated fair value recognized in our consolidated financial statements, especially for disposal groups located in conflict regions.
In fiscal year 2022, we recorded $45 million in expense before insurance settlements, primarily related to inventory, property, and equipment losses from the fire and other related expenses. We have insurance for the majority of property and other losses resulting from the fire and have received $33 million in insurance settlements in fiscal year 2022.
In fiscal years 2023 and 2022, we recorded total expenses of $55 million before insurance settlements, primarily related to inventory, property, and equipment losses from the fire and other expenses related to the fire and closure of our South African business.
Consolidated Interest Income ($ in millions) 2022 2021 Interest income $ 24 $ 14 Interest income as a percentage of net sales 0.2 % 0.1 % Interest income increased by $10 million, or by 71.4%, in fiscal year 2022, compared to fiscal year 2021, mainly driven by yield improvements on Euro denominated commercial paper and improved rates on cash balances held by the Group.
Consolidated Interest Income ($ in millions) 2023 2022 Interest income $ 31 $ 24 Interest income as a percentage of net sales 0.2 % 0.2 % Interest income increased by $7 million, or 29%, in fiscal year 2023, compared to fiscal year 2022, driven by increased interest rates on cash balances.
($ in millions) 2022 2021 Net sales including intersegment sales $ 11,151 $ 10,040 Adjusted EBIT from continuing operations 1,517 1,427 Adjusted EBIT from continuing operations as a percentage of net sales 13.6 % 14.2 % Net sales including intersegment sales increased by $1,111 million, or by 11.1%, in fiscal year 2022, compared to fiscal year 2021.
Segment Results of Operations Flexibles Segment ($ in millions) 2023 2022 Net sales $ 11,154 $ 11,151 Adjusted EBIT 1,429 1,517 Adjusted EBIT as a percentage of net sales 12.8 % 13.6 % Net sales increased by $3 million, or 0%, in fiscal year 2023, compared to fiscal year 2022.
($ in millions) 2022 2021 Net sales $ 3,393 $ 2,823 Adjusted EBIT from continuing operations 289 299 Adjusted EBIT from continuing operations as a percentage of net sales 8.5 % 10.6 % Net sales increased by $570 million, or by 20.2%, in fiscal year 2022, compared to fiscal year 2021.
Rigid Packaging Segment ($ in millions) 2023 2022 Net sales $ 3,540 $ 3,393 Adjusted EBIT 265 289 Adjusted EBIT as a percentage of net sales 7.5 % 8.5 % Net sales increased by $147 million, or 4%, in fiscal year 2023, compared to fiscal year 2022.
Consolidated Gross Profit ($ in millions) 2022 2021 Gross profit $ 2,820 $ 2,732 Gross profit as a percentage of net sales 19.4 % 21.2 % Gross profit increased by $88 million, or by 3.2%, in fiscal year 2022, compared to fiscal year 2021. The increase was primarily driven by the increase in net sales of 13.1% referred to above.
Consolidated Gross Profit ($ in millions) 2023 2022 Gross profit $ 2,725 $ 2,820 Gross profit as a percentage of net sales 18.5 % 19.4 % Gross profit decreased by $95 million, or 3%, in fiscal year 2023, compared to fiscal year 2022.
Dividend Payments In fiscal years 2022, 2021, and 2020, we paid $732 million, $742 million, and $761 million, respectively, in dividends. Credit Rating Our capital structure and financial practices have earned us investment grade credit ratings from two internationally recognized credit rating agencies.
Credit Rating Our capital structure and financial practices have earned us investment grade credit ratings from two internationally recognized credit rating agencies.
Additionally, the expected long-term rate of return on plan assets is derived for each benefit plan by considering the expected future long-term return assumption for each individual asset class.
In countries where there is not a deep market for corporate bonds, we generally use a government bond approach to set the discount rate. Additionally, the expected long-term rates of return on plan assets is derived for each benefit plan by considering the expected future long-term return assumption for each individual asset class.
Consolidated Results of Operations ($ in millions, except per share data) 2022 2021 Net sales $ 14,544 $ 12,861 Operating income 1,239 1,321 Operating income as a percentage of net sales 8.5 % 10.3 % Net income attributable to Amcor plc $ 805 $ 939 Diluted Earnings Per Share $ 0.529 $ 0.602 Net sales increased by $1,683 million, or by 13.1%, in fiscal year 2022, compared to fiscal year 2021.
Highly inflationary accounting resulted in a negative impact of $24 million and $16 million in foreign currency transaction losses that were reflected in the consolidated statements of income for the fiscal years ended June 30, 2023, and 2022, respectively. 31 Results of Operations Consolidated Results of Operations ($ in millions, except per share data) 2023 2022 Net sales $ 14,694 $ 14,544 Operating income 1,508 1,239 Operating income as a percentage of net sales 10.3 % 8.5 % Net income attributable to Amcor plc $ 1,048 $ 805 Diluted Earnings Per Share $ 0.705 $ 0.529 Net sales increased by $150 million, or 1%, in fiscal year 2023, compared to fiscal year 2022.
Excluding the impact of disposed and ceased operations of $87 million, or (0.8%), negative currency impacts of $248 million, or (2.5%), and pass-through of raw material costs of $1,091 million, or 10.9%, the increase in net sales including intersegment sales for fiscal year 2022 was $355 million, or 3.5%, driven by favorable price/mix.
Excluding the pass-through of raw material costs of $776 million, negative currency impacts of $426 million, and the negative impact of disposed and ceased operations of $207 million, the remaining variation in net sales for the fiscal year 2023 was an increase of $7 million, or 0%, reflecting price/mix benefits of 3% and unfavorable volumes of (3%).
Raw Material, Inflation, and Supply Chain Trends During fiscal year 2022, we experienced persistent supply shortages and price volatility of certain resins and raw materials in both of our reportable segments as a result of market dynamics that first materialized in the second half of fiscal year 2021 and higher rates of regional inflation impacting energy, fuel, and labor costs.
Significant Developments Affecting the Periods Presented Economic and Market Conditions During fiscal year 2023, we have continued to experience intermittent supply shortages and price volatility of certain resins and raw materials as a result of market dynamics, especially in the first half of fiscal year 2023, and higher rates of inflation impacting energy, fuel, and labor costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeChanges in prices of our key raw materials and commodities, including resins, film, aluminum, inks, solvents, adhesives and liquids, and other raw materials, may result in a temporary or permanent reduction in income before income taxes and equity in income/(loss) of affiliated companies depending on the level of recovery by material type.
Biggest changeChanges in prices of our primary raw materials may result in a temporary or permanent reduction in income before income taxes and equity in income of affiliated companies depending on the level of recovery by material type. The level of recovery depends both on the type of material and the market in which we operate.
The impact of translating Euro and other non-U.S. dollar net sales and operating expenses into U.S. dollar for reporting purposes will vary depending on the movement of those currencies from period to period. Raw Material and Commodity Price Risk The primary raw materials for our products are resins, film, aluminum, and chemicals.
The impact of translating Euro and other non-U.S. dollar net sales and operating expenses into U.S. dollar for reporting purposes will vary depending on the movement of those currencies from period to period. Raw Material and Commodity Price Risk The primary raw materials for our products are resins, film, chemicals, and aluminum.
There have been no material changes in the risks described below, other than increased volatility in connection with the Russia-Ukraine conflict and the COVID-19 pandemic, for fiscal years 2022 and 2021, related to interest rate risk, foreign exchange risk, raw material and commodity price risk, and credit risk.
There have been no material changes in the risks described below, other than increased volatility in connection with the Russia-Ukraine conflict and the COVID-19 pandemic, for fiscal years 2023 and 2022, related to interest rate risk, foreign exchange risk, raw material and commodity price risk, and credit risk.
We manage our credit risk from balances with financial institutions through our counterparty risk policy, which provide guidelines on setting limits to minimize the concentration of risks and therefore mitigating financial loss through potential counterparty failure and on dealing and settlement procedures.
We manage our credit risk from balances with financial institutions through our counterparty risk policy, which provides guidelines on setting limits to minimize the concentration of risks and therefore mitigating financial loss through potential counterparty failure and on dealing and settlement procedures.
For the year ended June 30, 2022 , a hypothetical but reasonably possible adverse change of 1% in the underlying average foreign currency exchange rate for the Euro would have resulted in an adverse impact on our net sales of $25 million.
For the year ended June 30, 2023, a hypothetical but reasonably possible adverse change of 1% in the underlying average foreign currency exchange rate for the Euro would have resulted in an adverse impact on our net sales of $26 million.
As of June 30, 2022 and 2021, we did not have a significant concentration of credit risk in relation to derivatives entered into in accordance with our hedging and risk management activities. 46
As of June 30, 2023, and 2022, we did not have a significant concentration of credit risk in relation to derivatives entered into in accordance with our hedging and risk management activities. 47
During fiscal years 2022 and 2021, 17% and 18% of net sales, respectively, were generated in Euro functional currency entities with the remaining 34% and 34% of net sales, respectively, being generated in entities with functional currencies other than U.S. dollars and Euros.
During fiscal year 2023 and 2022, 18% and 17%, respectively, of net sales were generated in Euro functional currency entities with the remaining 30% and 34% of net sales, respectively, being generated in entities with functional currencies other than U.S. dollars and Euros.
During fiscal years 2022 and 2021, 49% and 48% of our net sales, respectively, were effectively generated in U.S. dollar functional currency entities.
During fiscal years 2023 and 2022, 52% and 49% of our net sales, respectively, were effectively generated in U.S. dollar functional currency entities.
An increase of 1% in the floating rate on the relevant interest rate yield curve applicable to both derivative and non-derivative instruments denominated in U.S. dollars and Euros, the currencies with the largest interest rate sensitivity, outstanding as of June 30, 2022, would have resulted in an adverse impact on income from continuing operations before income taxes and equity in income/(loss) of affiliated companies of $29 million expense f or the fiscal year ended June 30, 2022.
An increase of 1% in the floating rate on the relevant interest rate yield curve applicable to both derivative and non-derivative instruments denominated in U.S. dollars and Euros, the currencies with the largest interest rate sensitivity, outstanding as of June 30, 2023, would have resulted in an adverse impact on income before income taxes and equity in income of affiliated companies of $20 million expense for the fiscal year ended June 30, 2023.
Across our business, we have a number of contractual provisions that allow for passing on of raw material price fluctuations to customers within predefined periods. 45 A 1% increase on average prices for resins, film, aluminum, and liquids, not passed on to the customer by way of a price adjustment, would have resulted in an increase in cost of sales and hence an adverse impact on income from continuing operations before income taxes and equity in income (loss) of affiliated companies for fiscal years 2022 and 2021 of $74 million and $58 million, respectively.
Across our business, we have a number of contractual provisions that allow for passing on of raw material price fluctuations to customers within predefined periods. 46 A 1% increase on average prices for resins, film, chemicals, and aluminum, not passed on to the customer by way of a price adjustment, would have resulted in an increase in cost of sales and hence an adverse impact on income before income taxes and equity in income of affiliated companies of $67 million for fiscal year 2023.
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The level of recovery depends both on the type of material and the market in which we operate.

Other AMCR 10-K year-over-year comparisons