Orora’s Australian packaging operation delivered what the company said was a robust result for the financial year, with glass finding new markets following the Chinese wine ban, but it was in the US where the big growth took place.
The company achieved what it said were “solid” earnings in Australasia, with EBIT in line with forecast and broadly flat, while its US operation saw EBIT surge by 36 per cent, and sales rise by 17.7 per cent.
Brian Lowe, managing director and CEO, said, “Orora has delivered a strong result for the fiscal year 2022, reflecting the disciplined execution of our strategic priorities in the face of global supply chain and inflationary challenges."
Looking to the future, the company's growth strategy is to optimise its current activities, enhance and expand its core products and services, and to enter new market segments that are complementary to its current capabilities.
Sales for the group in FY22 overall topped $4bn, rising by 15.6 per cent, 13 per cent on a constant currency basis, with North America revenue up by 17.7 per cent, or 14.3 per cent on a constant currency basis. Net profit after tax for the group was up up by 36 per cent to $184.7m.
Overall EBIT was up by 14.6 per cent, 12.7 per cent on constant currency. Earnings per share were up by 28.2 per cent to 21.7 cents. Australasian EBIT was $150.6m, virtually the same as last year’s $150.3m, while US EBIT grew by a third, up to $134.9m.
Lowe said, “Our Australasian business performed solidly – the team has done a commendable job of managing inflationary cost pressures and supply chain disruptions to deliver revenue growth and earnings that demonstrate the resilience of the Beverage business. Following significant volume growth in the prior year; Cans saw a slight improvement in product sales mix and volumes, while the Glass business successfully expanded into new product ranges to mitigate the impacts of lower wine volumes, due to the Chinese wine tariffs on Australian wine exports.”
Australasian revenue was up by nine per cent to $909m, mainly attributable to higher aluminium costs for its cans that have been passed through to customers, along with “slight” growth in cans and glass volumes.
Lowe said the company had kept all its key contracts in cans and glass, and said strong investment was continuing. He said, "We are investing $110m on a second can line at Dandenong, and additional endings manufacturing in Ballarat. These two investments will give us 10 per cent more cans and 40 per cent more endings."
The Orora Group earnings are expected to be higher in the coming year, reflecting what the company says is “the resilience of the business” in what it says is expected to be a challenging year of economic conditions.
In Australasia for the new year, EBIT is expected to be broadly in line with FY22, with first half impacted by inflationary cost increases ahead of further second half customer price recovery. In North America, further EBIT growth is expected, reflecting the full year impact of FY22 price increases and continued implementation of profit improvement programmes.
It was across the Pacific where most growth occurred this year, Lowe said, “Our North American business again delivered an impressive improvement in both financial and operating performance, with an increase in revenue and earnings largely driven by an ongoing focus on business optimisation, customer account profitability and a relentless focus on managing inflationary inputs and cost to serve.” The packaging business achieved 15 per cent revenue growth, mostly through price increases, while its wide format print business Orora Visual is now in profit. Sale sin North America were $3.2bn, up from $2.7bn.
Back here, Orora will be making further investment in the Australasian Beverage business in the near and medium terms in response to “growth opportunities".
Paying tribute to his staff Lowe said the sustainability targets were all on track. Its new furnace in Gawler will be one of the most advanced, and sustainable in the world, and the the company will achieve its 2025 goal of 60 per cent recycled content in its glass packaging.
Commissioning of the new Cullet Benefication plant in Gawler is almost complete. It will “significantly” increase the recycled content in Orora’s glass packaging, and reduce greenhouse gas emissions.
Lowe said Orora was committed to helping its customers to better position their products wihtin the market, and this was where its innovation strategy was focused, he said, "For instance in digital prionting, enabling short-run jobs."
