Solid growth for Orora despite price pressures
Orora, one of the brewing industry’s biggest packaging suppliers, has reported a strong year after a “disciplined execution of strategy”.
Sales revenue rose to $4.1 billion, up 15.6 per cent for the year according to results released to the ASX yesterday by the company, which supplies glass bottles, aluminium cans, closures, tabs and ends to the beverage industries.
Statutory net profit after tax grew to $184.7 million, up 36 per cent on the previous year.
In its Australasian business, earnings before interest and taxes (EBIT) rose $300,000 to $150.6 million, driven by sustained volumes in cans across most formats following “significant” volume growth in the prior year although total margins were down compared to the prior year.
This was despite a change in the sales mix of its glass product as a result of Chinese tariffs on Australian wine imports, which prompted a move to lower profit margin categories.
Demand for cans remained strong in Australasia despite customer site disruptions throughout the year, underpinned by ongoing strong demand from both craft and mainstream beer as well as carbonated soft drinks. Slim and sleek can volumes also increased in the full year.
Inflationary pressures relating to freight, energy and materials – which have also been squeezing brewers – were mostly offset by cost recoveries and operating efficiencies, it said.
Orora chief executive officer Brian Lowe praised the “robust” earnings in Australia and “impressive improvement” in its North American business after a difficult period.
“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,” Lowe suggested in a media release.
“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.”
Additionally, as part of its sustainability plans, Orora says it is on track to achieve its 2025 goal of 60 per cent recycled content in the glass packaging it produced, after achieving 38 per cent recycled content this year which it says is an increase of 31 per cent.
Orora said earnings are expected to be higher in its next full year, “reflecting the resilience of the business in what is expected to be a challenging year of economic conditions”.
In Australasia though, earnings are expected to be broadly in line with this year’s results, as Orora suggested its first half will be impacted by inflationary costs increases before customer price recovery in the second half.