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Hi – i would be interested in your thoughts on AMC ? take a look at their historical provision accounting since the acquisition of Alcan. Provisions (current and non current) peaked at $560m in 2011 and declined to $182M in 2015 (including the spin off or ORA). The company has been acquisitive which helps to top up provisions, and in the 2016 result they topped up provisions again with $90M of one off restructuring. Cashflows have been good because working capital has been squeezed, but this is coming to an end. I can send you the data if you like. Packaging is difficult and it looks like AMC is a master at managing earnings through provision accounting.
Thanks Ronald, I’ve not looked at AMC but that sounds very very interesting, always looking for new ideas. I’ll definitely take a look and you may see it in a future blog post!
Ronald, I did the same exercise. In short the write back of provisioning and below the line abnormal items which amounts to $2.6bn over the last decade (arguably should have been above the line), would have meant the Executive should not have been paid a bonus for the last 5-6 years. Another way of looking at it is that their asset base has not grown at all in a decade (non-current assets still ~$7bn), despite $8bn net capex spent over that period! Go figure
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