Amcor secured materials, maintained customer service and passed through most of the inflation created by disruption linked to the Middle East conflict. Its response also tied up approximately $500 million in working capital, demonstrating why resilience must be measured in cash as well as continuity.
In Brief
- Amcor estimates that disruption associated with the Middle East conflict created a cumulative working-capital impact of approximately $500 million.
- The company secured the materials it required and passed through the vast majority of inflation, including approximately $280 million of pricing in the fourth quarter.
- Amcor expects to release more than $500 million in cash over the next 12 months by normalising inventory and improving the management of receivables and payables.
Maintaining Supply Absorbed Cash
Amcor’s response to raw-material disruption protected production and customer service, but it left a substantial amount of cash inside the operating cycle.
The company estimates that the Middle East conflict created a cumulative working-capital impact of approximately $500 million, above its earlier estimate of $300 million. Inventory contributed to the pressure, while the additional $200 million was primarily associated with accounts receivable.
Customers continued to pay within agreed terms as Amcor passed higher input costs into its prices. However, the increased value of those invoices, combined with a slightly greater-than-expected increase in days sales outstanding, meant more cash remained in receivables.
This exposes an important distinction between protecting profitability and protecting cash.
Amcor secured the materials required to continue serving customers. It also used pricing and productivity measures to respond to raw-material inflation. In the fourth quarter, the company realised approximately $280 million of pricing, passing through what management described as the vast majority of inflation.
Those actions protected the operating business, but they did not immediately restore cash conversion.
Higher material costs increase the value of inventory moving through the network. When those costs are passed into customer prices, they also increase the value of receivables until payment arrives. A business can therefore maintain supply and recover inflation in its margins while still experiencing significant pressure on cash.
That pressure was visible in Amcor’s full-year results. Fiscal 2026 free cash flow reached $1.3 billion, approximately $200 million below the company’s outlook range. Amcor attributed the shortfall primarily to higher-than-expected inventory and receivables effects associated with the Middle East conflict, alongside accelerated integration spending following its combination with Berry.
For supply-chain leaders, the episode makes working capital part of the resilience decision. Additional inventory, alternative sourcing and higher-cost materials can protect service during disruption, but they may also create a substantial financing requirement before the operating benefit converts back into cash.
Price Recovery Is Not Cash Recovery
The distinction matters because supply-chain performance is frequently assessed through service, cost and margin.
Amcor performed strongly against those measures. It maintained material availability, continued serving customers and recovered most of its input inflation through pricing. Yet approximately $500 million remained tied up across inventory and receivables.
That does not make the response unsuccessful. Nor does it mean the full amount represents a permanent cost. Amcor expects the working-capital effects to reverse as supply conditions normalise and cash moves through the operating cycle.
It does, however, show why price-cost recovery cannot be considered the end of a disruption response.
Pricing may protect margin, but cash is not recovered until inventory has been converted into sales and customers have paid. The duration of that cycle becomes particularly important when input costs rise rapidly or a company builds additional material protection across a large manufacturing network.
Senior supply-chain leaders therefore need visibility beyond the cost of acquiring materials. They need to understand how disruption changes inventory value, payment timing, receivables and the total cash required to maintain service.
Releasing the Cash Is Now an Operating Priority
Amcor expects to recover more than $500 million in cash over the next 12 months. Management indicated that between $100 million and $300 million could return during the first six months, although the timing will depend partly on continued material availability and supply-chain normalisation.
The recovery programme covers all three major components of working capital.
Amcor has established specific targets for raw-material and finished-goods inventory days, days sales outstanding and further improvements in days payable. Management has not disclosed the individual targets, but the structure indicates that cash recovery will be managed across the full operating cycle rather than through inventory reduction alone.
Each lever carries operational consequences.
Reducing raw-material inventory too aggressively could remove some of the protection that allowed plants to maintain supply during disruption. Extending payment terms affects suppliers and must be considered alongside their financial health and ability to provide continuity. Receivables depend partly on customer payment behaviour following the price increases used to recover inflation.
The objective cannot simply be to minimise working capital. Amcor must release the temporary cash absorbed during the disruption without weakening the supply reliability it was used to protect.
That task is further complicated by the integration of the former Berry business. The larger combined network creates opportunities to introduce common inventory policies, sourcing disciplines and payment practices, but it also increases the scale across which those changes must be executed.
Supply Conditions Will Determine the Pace
The speed of Amcor’s working-capital recovery remains partly dependent on conditions outside the company.
Management’s expectations assume reasonable stability in raw-material costs. Significant changes in polyethylene or polypropylene prices could affect the timing, while another period of constrained availability could require the company to retain more inventory for longer.
Amcor must therefore distinguish between capital that can be safely released and protection that remains justified by current supply risk.
This is the harder resilience decision. Inventory accumulated during disruption should not become a permanent feature of the network, but reducing it according to a fixed financial timetable could expose operations if the underlying supply risk has not receded.
The appropriate level of working capital must reflect the service requirement, material availability and risk carried by the network at that point in time.
Resilience Must Be Measured in Cash
Amcor’s experience demonstrates why resilience cannot be evaluated through continuity and margin protection alone.
The company secured supply, maintained service and passed through most of a rapid increase in input costs. Operationally, the response worked. Financially, it left approximately $500 million inside the working-capital cycle.
The next test is whether Amcor can release that capital without removing the protection that allowed the network to continue operating.
For supply-chain leaders, the implication is direct. Resilience planning must establish not only how the business will maintain supply, but how much cash the response could absorb, where that cash will sit across the operating cycle and what conditions must be met before it can be released.
