Michael Casamento
Executive Vice President and Chief Financial Officer at Amcor
Thank you, P.K., and thanks to everyone joining us today.
Starting with Slide 7 and a summary of our Q1 financial results. Our fiscal 2025 year is off to a very good start, with broad-based improving customer demand across many end markets. Our teams continue to position Amcor to win with our customers, which resulted in our third consecutive quarter of sequential improvement in volumes.
Overall volumes for the fiscal first quarter were up approximately 2% compared with 1% in Q4. As expected and called out in August, volumes remained weak in health care and North American beverage, which unfavorably impacted overall company volumes by approximately 2%. So across the balance of the business, overall volumes increased by 4% over the September quarter last year. Price/mix had an unfavorable impact on sales of approximately 3%, primarily driven by continued destocking in higher-margin health care categories, as expected and as noted on our August earnings call.
First quarter adjusted earnings per share was in line with our expectations, coming in at $0.162 per share, which represents growth of 5% on a comparable constant currency basis. Adjusted EBIT grew by 3% compared with last year, and our teams continue to proactively manage costs well, helping drive operating leverage across the business. This resulted in another quarter of margin improvement, with adjusted EBIT margin increasing by 50 basis points to 10.9%.
Moving to our Flexibles segment on Slide 8. Q1 volumes were up 3% compared with last year and improved modestly on a sequential basis, reflecting broad-based growth across most geographies and end markets. Net sales decreased by 1% on a comparable constant currency basis as widespread volume growth across the Flexibles business was offset by unfavorable price/mix of approximately 4%, again, primarily related to lower health care sales.
As anticipated and discussed on last quarter's call, destocking in health care continued in North America and Europe in pharmaceuticals, and this resulted in a headwind of approximately 2% to overall segment volumes. We expect this destocking to abate by the end of calendar 2024. Across the balance of our Flexibles portfolio, volumes were up approximately 5%, reflecting solid customer demand across all regions and in many product categories.
In North America and Europe, first quarter demand continued to improve for the second consecutive quarter. Volumes were up low to mid-single digits in both regions despite the negative impact of health care destocking. In emerging markets, our Asia Pacific and Latin American businesses also continued to deliver good volume growth at low to mid-single-digit rates, supported by solid demand in China, India, Brazil and Peru.
From a product category standpoint, meat, dairy, liquids and ready meals all delivered mid-single-digit growth and single-serve coffee was up. In health care, medical returned to modest growth, however, pharma volumes were down low double digits compared with last year.
Adjusted EBIT for the quarter of $329 million grew by 3% over last year on a comparable constant currency basis. Higher volumes, combined with strong cost performance, led to another quarter of margin expansion, with adjusted EBIT margins up 40 basis points to 12.9%.
Turning to Rigid Packaging on Slide 9. The Rigids business continues to advance its performance, and the trajectory of overall segment volumes improved for the third consecutive quarter. The business delivered another quarter of earnings growth despite a 4% decline in overall volumes compared with last year. As expected, this was primarily driven by continued soft consumer and customer demand in the North American beverage business.
Net sales were down 4% on a comparable constant currency basis, with price/mix relatively flat. In North America, beverage volumes were down high single digits, consistent with our volume performance in the previous quarter, despite a modest negative impact from the temporary closure of a couple of plants in the Southern and Eastern United States toward the end of the quarter to help ensure our people remain safe from the impacts of Hurricane Helene.
As anticipated entering the quarter, consumer demand remained muted in Amcor's key end markets, and customer mix remained unfavorable. Latin American volumes were lower than last year, reflecting weaker customer demand in Argentina and Colombia, which was partly offset by growth in Mexico and the Caribbean.
The Specialty Containers business delivered good growth in the dairy and nutrition categories, with volumes down in health care due to destocking. From an earnings perspective, the business delivered another quarter of growth and margin expansion through an ongoing focus on cost reduction and productivity measures.
Adjusted EBIT of $62 million in Q1 was up 2% on a comparable constant currency basis, with EBIT margin increasing by 60 basis points to 7.7%. And as announced earlier today, we reached an agreement to sell our 50% interest in the Bericap North America closures business to our joint venture partner for $122 million, which we will use to reduce debt.
Although we've had a long and respectful relationship with Bericap over the past 27 years, at this juncture, we have chosen to unwind the joint venture due to differing views on near-term capital requirements and resulting returns. While Amcor continues to operate in the closure space, and it remains a category of interest, we are committed to maintaining our disciplined approach to capital allocation.
Moving to cash on the balance sheet on Slide 10. Consistent with historical quarterly phasing, Q1 was a quarter of cash usage. Compared with last year, CapEx increased to support a number of important projects that will continue to drive our sustainability, innovation and growth agendas. Additionally, we increased raw material inventories to ensure we are ready to service improving volume trends.
Leverage was a little higher than we were anticipating, given the impact of higher inventories, and secondly, due to stronger euro spot rates toward the end of the quarter, which negatively impacted debt and subsequent leverage by 0.1 times, which has since unwound. We expect leverage to reduce through the fiscal year and anticipate an improvement in the second quarter with an end point below prior year December, and we remain confident in meeting our expectation to exit fiscal 2025 with leverage at 3 times or lower.
During the quarter, we returned approximately $180 million in cash to shareholders through our quarterly dividend, and our Board has also increased the quarterly dividend per share by 2% to $0.1275. That brings me to the outlook on Slide 11. As P.K. mentioned, based on our good start to fiscal 2025, we are reaffirming our guidance for the fiscal year.
For fiscal 2025, we continue to expect adjusted earnings to be in the range of -- to be in the range of $0.72 to $0.76 per share on a reported basis, representing comparable constant currency growth of 3% to 8%. Our performance through the first quarter further supports our expectations for strong growth in the underlying business for the year as we continue to build on our volume and earnings momentum.
As we pointed out on our August call, it's important to remember that this guidance includes an EPS headwind of approximately 4% related to more normalized levels of incentive compensation based on our expectations for improved annual financial results. Excluding this incentive normalization, we expect growth from the underlying business in the high single to low double-digit range.
We continue to assume overall volumes will increase in the low to mid-single-digit range for the year, with trading performance through October aligned with these expectations. Interest expense guidance remains between $290 million and $305 million, with an effective tax rate in the range of 19% to 20%.
Looking at our fiscal second quarter, we expect adjusted EPS to be relatively in line with our first quarter performance. This means fiscal 2025 earnings phasing, as outlined on our August earnings call, will be broadly aligned with the historical average of approximately 45% of earnings being delivered in the first half of the year and 55% in the second half, with the fourth quarter typically the strongest of the year.
And finally, we're reaffirming our expectations to generate strong adjusted free cash flow in the range of $900 million to $1 billion for the year, supporting our confidence in exiting the year with the leverage back at 3 times or lower, as I noted earlier. We're happy with our start to fiscal 2025 and look forward to the opportunities we have to accelerate our future growth.
And with that, I'll hand back to P.K.