Amcor PLC (AMCR)
Interest coverage
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,046,000 | 1,258,000 | 1,541,000 | 1,319,000 | 1,347,000 |
| Interest expense | US$ in thousands | 396,000 | 348,000 | 290,000 | 159,000 | 153,000 |
| Interest coverage | 2.64 | 3.61 | 5.31 | 8.30 | 8.80 |
June 30, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,046,000K ÷ $396,000K
= 2.64
The interest coverage ratios for Amcor PLC over the specified periods reveal a notable decline in the company's ability to meet its interest obligations from 2021 to 2025. As of June 30, 2021, the interest coverage ratio stood at 8.80, indicating a robust capacity to cover interest expenses nearly nine times over with earnings before interest and taxes (EBIT). This high ratio reflects a strong financial position and suggests low risk associated with interest payments at that time.
By June 30, 2022, the ratio experienced a slight decrease to 8.30, implying a modest reduction in earnings relative to interest obligations, yet remaining comfortably above the common threshold of 3.0 that typically signifies satisfactory coverage. The downward trend continued into 2023, with the ratio dropping more significantly to 5.31, which still indicates a reasonable safety margin but signals a potential increase in financial pressure.
The decline persists into 2024, where the interest coverage ratio diminishes further to 3.61. Although this remains above the critical threshold, it suggests that earnings are becoming less sufficient to comfortably cover interest expenses, thus elevating the risk profile associated with debt servicing. By June 30, 2025, the ratio falls to 2.64, falling below the generally acceptable benchmark of 3.0, indicating that earnings are insufficient to cover interest obligations with a comfortable margin. This decrease may reflect challenges in earnings generation or growing interest expenses, raising concerns over the company's ability to sustain its current debt levels without strain.
Overall, the progression of the interest coverage ratio demonstrates a weakening trend in Amcor PLC's ability to meet interest payments from its operating earnings over the observed period. While the ratios remained above critical levels until recently, the nearing or falling below of the threshold in 2025 suggests increased financial vulnerability and warrants closer scrutiny of earnings quality, debt structure, and future profitability prospects.
Peer comparison
Jun 30, 2025