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Amcor Decides to Keep Sunclipse

Australian corrugator Amcor Ltd. has decided to keep its Sunclipse Inc. corrugating and sheet plant operations in North America after failing to attract a sufficient price.

“Amcor has a disciplined approach to valuing businesses that applies to both acquisitions and divestments,” says Ken MacKenzie, managing director and ceo. “On this occasion, the potential selling price did not match the value we ascribed to the businesses.”

Buena Park, Calif.-based Sunclipse has three corrugators and seven sheet plants in Arizona, Texas and California, plus plants in Mexico. The company includes Corru-Kraft sheets in Los Angeles, Master Box packaging supply and MPPG customer packaging, as well as Kent H. Landsburg Co. and KHL Engineering Packaging Solutions.

In its annual report, Amcor Sunclipse says the company had “a difficult year” with reported earnings down 46 percent to $29.7 million. It posted net sales of $864 million for the year ending June 30, compared to $995 million last year.

The Sunclipse manufacturing distribution business, which has 58 sites throughout the U.S. and Mexico, reported a solid first half.

The report states the second half was considerably more challenging as a number of important market segments were negatively impacted by the slowing economic conditions. Sales for the distribution business were 9.3 percent lower at $694 million, after being only 3.9 percent lower in the first half. The strong focus on cost control meant that gross margins reduced by only 0.2 percent.

The corrugated business also had a difficult year, the report states. After a solid first quarter, volumes were down 25 percent through the November to January period. Although market conditions improved in the second half, there was still considerable weakness and it was not possible to flex variable costs to match declining volumes.

In August, parent company Amcor, based in Melbourne, agreed to buy certain parts of the Alcan Packaging group from Rio Tinto for $2.025 billion. The deal includes the food flexibles businesses in Europe and Asia; a global pharmaceutical business, which manufactures predominantly flexible packaging; global folding cartons for tobacco products operations; and a relatively small rigid plastic containers business, largely in North America.