Revenue growth for Orora despite inflationary pressures
Packaging supplier Orora has reported a strong first half of the 2023 financial year, despite challenges in “rising inflationary pressures and supply chain complexities”.
The group reported $2.26 billion in sales revenue, a 13.9 per cent increase on the prior corresponding period, according to results released to the ASX this morning.
Its Australiasian business recorded $534 million in revenue, up 20.6 per cent, which was driven by volume growth, higher aluminium costs and inflationary costs.
“While pricing largely drove the top line revenue growth, volumes grew revenue by a total of three per cent, with growth in cans and new glass product categories offsetting a decline in commercial wine and beer glass sales,” Orora managing director and chief executive officer Brian Lowe said during a media call.
However its Australiasian business’ earnings before interest and taxes (EBIT) declined by 3.5 per cent to $81.1 million, which was “in line with expectations”, according to Lowe who praised the results as “robust”.
“Our financial results demonstrate our team’s ability to navigate these challenges and deliver a robust earnings performance in line with expectations and outstanding to our specific regions,” he said.
“As I’ve said before, the cornerstone of our results is an enduring commitment to delivering against our strategy, and we’ve made good progress on our strategic priorities during the first half.”
Elsewhere, the business outlined its investment in capacity expansion and recycling capability in Australasia, as seen through its $25 million glass recycling plant in South Australia launched last year.
“Our Ballarat ends capacity expansion project will be completed by March 2023 and our second canning line at Dandenong will be completed by June of 2023,” Lowe said.
“These investments add 10 per cent can additional capacity and 40% additional ends capacity.”
The business expects earnings to be higher for the rest of the financial year, as outlined by Lowe.
“In Australasia, we expect our second half of 23 EBIT to be up on the second half of 22, with full year EBIT broadly in line with what we did in FY22,” he said.
“As always, that remains subject to global and domestic economic conditions, currency fluctuations, and hopefully no impact from the ongoing COVID-19 pandemic.”
Lowe also presented Orora’s priorities for the rest of the year across its regions.
“As the glass business diversifies its portfolio and consumer preferences continue to shift from glass and plastic to can formats, we will continue to optimise the product mix of both cans and glass,” he said.
“Across both North America and Australasia, our attention is firmly focused on sustaining the momentum we’ve built and continuing the continued disciplined execution of our strategic priorities.”