Orora Advances with Portfolio Streamlining and Strategic Capacity Expansion

Portfolio Simplification and Strategic Focus

Orora has marked a significant milestone in its transformation journey during the first half of FY25 by simplifying its portfolio and sharpening its focus on global beverage packaging. The divestment of the OPS business in December 2024, followed by the sale of the Closures business in January 2025, has enabled Orora to concentrate on its core strengths in Global Glass and Australasian Cans. These moves have strengthened the balance sheet, allowing the company to reduce debt and initiate an on-market share buyback program valued at approximately $320 million.

Managing Director Brian Lowe emphasised that these strategic decisions position Orora to capitalise on organic growth opportunities, particularly through capacity expansions in the Cans segment and leveraging its global glass manufacturing footprint.

Financial Performance Amid Market Challenges

Orora reported an underlying EBIT of $120.8 million for H1 FY25, a 24.6% increase compared to the prior corresponding period. This uplift was primarily driven by the inclusion of six months of earnings from the recently acquired Saverglass, compared to just one month previously. Excluding Saverglass, underlying EBIT declined by 30.1%, largely due to operational disruptions including a $24 million impact from the G3 furnace rebuild at the Gawler glass site.

Underlying net profit after tax (NPAT) rose marginally by 1.2% to $58.8 million, while statutory NPAT from continuing operations was a modest $0.2 million, reflecting significant restructuring costs related to the planned closure of the G1 furnace. The interim dividend was maintained at 5.0 cents per share, consistent with prior payments, underscoring Orora's commitment to shareholder returns despite the challenging environment.

Operational Adjustments and Capacity Management

The structural decline in the Australian commercial wine market has prompted Orora to undertake a comprehensive review of its glass production capacity. The company plans to reduce operations at its Gawler site from three furnaces to two, with the oldest furnace (G1) scheduled for closure in the second half of calendar year 2025. This rationalisation aims to improve utilisation and cost efficiency, with some production volumes redirected to the Ras Al-Khaimah facility in the UAE.

In Europe, Orora intends to modernise its Ghlin manufacturing site in Belgium, consolidating all European wine and champagne bottle production there. This move is expected to enhance cost competitiveness and operational flexibility, particularly as Saverglass navigates ongoing de-stocking and uncertain demand recovery in the region.

Growth in Australasian Cans and Sustainability Initiatives

The Australasian Cans business demonstrated resilience with a 5.2% revenue increase and a 6.4% rise in EBIT, despite modest volume growth of 1.1% amid subdued consumer spending. Orora is actively expanding capacity, commissioning a second canning line at Revesby, NSW, and commencing construction of a new line at Rocklea, Queensland. These investments are designed to capture the ongoing shift in beverage packaging preferences towards cans.

On the sustainability front, Orora has made notable progress, including commissioning the rebuilt G3 furnace at Gawler, which utilises oxyfuel technology to reduce energy consumption and CO2 emissions by approximately 30%. The company remains on track to meet its target of 60% recycled glass content in Australian products this financial year and is advancing plans for furnace hybridisation and electrification in Europe.

Outlook and Market Considerations

Looking ahead, Orora expects second-half EBIT to be broadly in line with the prior corresponding period, with improvements anticipated across all business segments. The G3 furnace is now fully operational, eliminating prior rebuild impacts, while the Cans business anticipates stronger volume growth supported by capacity expansions. However, the company remains cautious given the structural challenges in the commercial wine market and the uncertain pace of recovery in European demand for Saverglass products.

Orora's strategic focus on portfolio simplification, operational efficiency, and targeted growth investments positions it to navigate these headwinds while delivering shareholder value.