Orora reviewing US wide format operation

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Australian packaging giant Orora is undertaking a major strategic review of its US wide format operation, Orora Visual (OV), as the US business made it back into the black this year.

Strategic review: Brian Lowe, CEO, Orora
Strategic review: Brian Lowe, CEO, Orora

Brian Lowe, CEO of Orora told Print21 the major strategic review of OV will be, “looking both internally, and externally - at the market, and whether Orora is the natural owner of the business". That review will be complete by Christmas.

OV is a nationwide business there. Its revenue was up by 7.7 per cent on last year, with strong second half growth offsetting a Covid-impacted first half. OV makes up part of the North America Orora operation, together with Orora Packaging Solutions. Lowe said Orora was “very pleased with the US performance this year”, which saw profits surge by 43 per cent, on sales up by 8.2 percent to US$2bn. The US accounts for three quarters of Orora's revenue, but only 40 per cent of its profits.

Orora saw its full year results rise on last year, and says it is now well positioned to pursue new growth opportunities, both in its Australian beverage business and in North America.

Sales revenue was flat at $3.54bn, but on a constant currency basis was up 7.8 per cent on last year, the difference reflecting the decline in the Aussie dollar against the US greenback, which is where most of the company’s revenue now comes from.

Net profit after tax rose strongly, up by 23.7 per cent to $156.7m, and on a constant currency basis up by a 34 per cent on the previous year. Its EBIT rose by 11.6 per cent to $249m, or 17.3 per cent on a constant currency basis.

Lowe said: “Orora has produced a strong result in both Australasia and North America, where all results have improved, thanks to our focus and execution of strategy.

“In a year that continued to present unique challenges due to Covid-19, I am proud to say Orora delivered a financial result that reflects the team’s outstanding commitment, passion and resilience, and the company’s core strategies for each business.”

Sales revenue from Australia grew by 6.1 per cent to $834m, with an EBIT up by 2.5 per cent to $150m, driven by cans and closures.

The company’s glass business took a hit thanks to the tariffs on Australian wine imposed by China. However, Lowe said by the end of the financial year the company had made up 90 per cent of what had been lost in China, mainly with new production for beers and non-alcoholic beverages bottles.

North American EBIT surged by 43 per cent to US$73.8m, on sales revenue up by 8.2 per cent to US$2.02bn, which Lowe said: “reflected the disciplined focus on cost control and profit improvement programmes, as well as improved trading conditions in the second half of the year.”

Decommissioning the former Petrie mill site cost the business $27m, which was partially offset by a $6.1m incremental gain on its sale of its Fibre business last year.

For next year, in Australasia, the company says its full year EBIT will be “broadly in line” with this year, and believes its cans business will continue to grow, while glass will remain subdued.

In the US, its says both its packaging division (OPS) and wide format print operation (OV) will both deliver continued growth. For its OPS business, the company is looking at M&A opportunities for next year and beyond

Orora said it has progressed with its sustainability agenda with “significant advances on circular economy initiatives” and “solid progress” on its five year Eco Targets. The company has committed to net zero Scope 1 and 2 greenhouse gas emission across all its operations by 2050, and says it knows how it will get a 40 per cent reduction by 2035, with further reductions after that coming through advances in technology. It also has a 60 per cent recycled content target for glass by 2025, and is currently building a new $25m glass recycling line at it Gawler plant that will be able to handle 400 million bottles a year.

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