Higher can volumes drove double digit growth in Australia for Orora in FY23, supported by an improved product mix and cost inflation recoveries.
Orora sales revenue for the year was $4.29bn, which was up 4.9 per cent on last year, but on a constant currency basis fell by 0.9 per cent. Net profit after tax slipped by 1.2 per cent to $184.8m, but underlying net profit after tax rose by 8.5 per cent to $203m, or by four per cent on a constant currency basis.
Underlying EBIT for the year was up by 12.3 per cent to $320.5m, or by 7.7 per cent on a constant currency basis. Orora has major operations in the US, hence the currency fluctuations.
The group reported strong earnings growth in North America, with EBIT up 15 per cent on a local currency basis, to $112.6m and resilient earnings performance in Australasia, with EBIT in line with expectations, up 1.8 per cent, to $153.3m.
Revenues in Australasia topped $1bn for the first time, driven by a 2.7 per cent growth in volumes, a 3.7 per cent rise in the price of aluminium which was passed through, and a seven per cent inflationary price rise.
Brian Lowe, managing director and CEO said, “Against a backdrop of ongoing challenging market conditions, Orora has delivered another solid result for the fiscal year 2023, reporting an increase in EBIT and earnings per share.
“The team have continued to navigate market pressures including inflation and supply chain challenges, and have remained disciplined in executing against our strategy. Their agility and commitment is reflected in our results.
In Australasia, in line with expectations, EBIT was slightly up, reflecting the impact of lower glass volumes, offset by growth across all formats in cans. The Australasian business returned to profit growth in the second half of the year. The cans business grew by ten per cent, and has recorded a CAGR across the past five years of 6.5 per cent. Orora saw significant growth in cans for craft beers, energy drinks, and carbonated drinks.
Orora is now exploring options for overseas expansion of its beverages business. Lowe told PKN that as far as a return to China for Australian wine was concerned, "All the signs are pointing in the right direction". However, Lowe said Orora "is not waiting around for a change there". He said, "We will be ready if Australian wine is readmitted to China, and certainly there are positive signals, but we are actively pursuing new glass bottle markets, including olive oils, carbonated drinks and spirits, with success."
In Australasia, a $30m can ends capacity growth project was completed in March at the company’s Ballarat site, and installation of a new $80m multi-size cans line at Dandenong was completed in June. Construction has also commenced on a new $85m multi-size can line at Revesby due for commissioning in the second half of 2025. Overall, Orora is currently investing some $195m in its Cans business, which includes $14m on the world's first Israeli-developed Velox digital can printing line.
In July, the Orora Beverage business launched its innovative Helio by Orora offering, a first-to-market can decoration and high-speed digital printing solution, providing customers with the benefit of fast turnaround and smaller quantity print runs suited to new products and promotional campaigns. Lowe told PKN today that the new digital print line would be producing 100 million units a year when fully operational. It is scheduled to come on stream in 2024, with a planned 35 million units in the first year.
The company is achieving a 38 per cent recycled content level in its glass products, with its new $25m glass beneficiation plant in Gawler now fully operational, and 30,000 tonnes of new cullet sources developed during the year. Cullet sourcing is now operational in every Australian state. Orora is aiming for 60 per cent recycled content in its glass bottles by 2025. Its recycled content in cans was 57 per cent this year, up from 54 per cent last year. The company has also just signed a deal with Epic Energy to supply 100 per cent of its energy for its South Australia operation from a solar farm, the supply expected to start next year.
The OPS business in North America has been focused on enhancing the business model and value proposition for customers through further investment in sustainability initiatives and digital capabilities. It took on 40 new sales staff during the year.
Lowe said, “Double digit EBIT growth was delivered by OPS in North America, largely driven by strong performance in our Distribution business, as a result of continued business optimisation gains, further operating efficiencies and active management of customer account profitability.”
Looking ahead to this year in Australasia, the company says the continued strength in Cans, with incremental volume growth from recent investments, is expected to offset the ongoing softness in Glass, which it expects from lower commercial wine volumes.
