• Orora's B9 paper recycling line at Botany, NSW.
    Orora's B9 paper recycling line at Botany, NSW.
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Orora has finalised the sale of its Australasian Fibre business to a subsidiary of Nippon Paper Industries for $1.72bn, with the packaging giant’s net proceeds after tax and costs amounting to $1.55bn.

According to a statement from Nippon Paper Group, the business has been incorporated with Australian Paper, which is now called Opal. Nippon Paper says it is “a vertically integrated paper and packaging solution business."

The statement continues: “The Opal business covers collecting wastepaper under its own system, manufacturing packaging board with cutting-edge facilities, converting board into packaging boxes through highly automated production, and supplying ancillary materials and associated services.”

Nippon Paper will appoint Masanobu Iizuka as the CEO of Opal effective 25 June 2020.

Orora managing director and CEO Brian Lowe said, "Today marks a new era for Orora, where the group retains its market leading Australasian beverage business, with a history of sustained growth, innovation, and profitability, and its North American packaging solutions and visual businesses, which are both positioned in the top five of their respective market segments.

"Today we farewell our Fibre Australasia colleagues and thank them for their contribution to Orora,” Lowe said.

Orora CEO and managing director Brian Lowe.
Orora CEO and managing director Brian Lowe.

“Looking ahead, Orora has commenced a review of the strategy for the continuing businesses, including assessing competitive advantage in key market segments and identifying growth options to leverage our existing core strengths,” Lowe said.

“The sale of the Australasian Fibre business provides an important opportunity for Orora to assess and shape the strategic path ahead for the company. The review is underway, and an update will be provided to shareholders later in the calendar year.”

The Australasian Fibre business has 25 plants and 27 depots across Australia and New Zealand. Revenues in the past financial year were around $1.4bn, with an EBITDA a smidge under 10 per cent at $137m.

The sale includes the Orora plant in Oakleigh with the country's first EFI Nozomi digital high speed, sheetfed, full-colour, carton printing line.

In addition to the Orora Fibre business, Nippon Paper owns Australian Paper, the country’s only manufacturer of copier and printer paper, and envelopes.

Nippon's ownership of the Orora fibre business will deliver integration, as Nippon already supplies Orora with its kraftliner, with which it makes its corrugated boxes. The new business is a competitor for market leader Visy, which also has integrated production.

The sale was announced in October.

Food & Drink Business

Western Australian producer, Brownes Dairy, has been put up for sale according to the Australian Financial Review (AFR), as one of its biggest lenders, China Mengniu Dairy, calls in its $200 million loan. A reduced demand for milk in China and the current positioning of the global market could be driving the decision.

The Central Coast is about to receive a boost to its local food and beverage manufacturing industry, with construction starting on the $17.14 million Food Manufacturing Innovation Hub, funded by the federal government’s National Reconstruction Fund (NFR).

The Australian Industry Group (Ai Group) says Australia is at a “critical crossroads” when it comes to R&D and decades of rhetoric have not delivered material change.