Packaging giant Orora Group increased its first-half profit by 12.3 per cent to $92.1 million despite rising energy prices in Australia.
Orora also confirmed it’s signed an agreement to acquire The Garvey Group and Graphic Tech businesses for US$54 million (approx. A$71 million) as part of growing its North American Point of Purchase (POP) business. The transactions are expected to be completed by the end of March 2017.
Orora’s MD & CEO Nigel Garrard said: “Both the results and acquisitions demonstrate the company’s focus on driving shareholder value and investing for future growth. Through continued financial discipline, Orora has been able to convert the growth in earnings into increased cash flow and improved returns, further strengthening the balance sheet and creating a strong platform from which to invest for future growth.”
Operationally, Orora delivered EBIT growth of 9.3% despite flat economic conditions and input cost headwinds, such as escalating energy prices in Australia. Earnings were driven higher by improving Group-wide operational efficiency and cost control initiatives, solid sales growth in Orora North America, from both Orora Packaging Solutions (OPS) and an on-target contribution from IntegraColor (Point of Purchase business acquired in March 2016).
Orora Australasia delivered a 3.3% increase in EBIT to $109.0 million. This was led by organic initiatives which delivered underlying earnings growth of approximately $10.0 million, however this was largely offset by cost pressures (mainly energy) in Glass and the Botany Recycled Paper Mill (B9) of approximately $7.0 million. Earnings growth was achieved despite underlying sales increasing by 1.0% which is reflective of the flat economic environment.
In Australia, key organic growth investments are on track. The A$42.0 million investment to increase the manufacturing output of the Gawler glass furnaces is on target for completion by March 2017 and the A$20.0 million state-of-the-art dairy sack line at Keon Park (Victoria) commenced production during the period.
“Orora expects to continue to drive organic growth and to invest in both innovation and growth opportunities during the remainder of FY17, with earnings expected to be higher than reported in FY16, subject to global economic conditions” said Garrard.