Orora Limited reported a substantial half-year profit of A$907.6 million, propelled by the sale of its North America packaging business and strategic restructuring. The company also announced an unfranked interim dividend of 5 cents per share.
- Half-year statutory profit surged to A$907.6 million, up from A$68.2 million
- Sale of North America packaging solutions business completed for A$1.79 billion
- Restructuring costs of A$83.7 million related to Gawler glass manufacturing site
- Divestment of Adelaide-based closures business finalized in January 2025
- Interim dividend declared at 5.0 cents per share, unfranked
Strong Profit Boost from Strategic Divestments
Orora Limited has delivered a striking turnaround in its financial performance for the half-year ended 31 December 2024, reporting a statutory profit after tax of A$907.6 million, a dramatic increase from A$68.2 million in the prior corresponding period. This surge was largely driven by the completion of the sale of its North America packaging solutions business (OPS) to Veritiv Corporation for an enterprise value of A$1.79 billion.
The divestment, finalized in December 2024, resulted in a net gain before tax of A$848.9 million, which was recognized within discontinued operations. The transaction has allowed Orora to recalibrate its capital structure, repay significant borrowings, and invest in expanding capacity at its Australasian Cans facility in Queensland.
Operational Restructuring and Capacity Review
Alongside the divestment, Orora undertook a detailed review of its glass production capacity in Australia, responding to a structural decline in the commercial wine market. The Gawler glass manufacturing site will reduce its furnace count from three to two, with the oldest furnace scheduled for closure in the second half of 2025. This restructuring has led to recognized costs and impairments totaling A$83.7 million, impacting continuing operations.
Despite these costs, the Global Glass segment's earnings before significant items, interest, and tax increased by 41.3%, bolstered by the full six months of earnings from the Saverglass acquisition completed in December 2023. Meanwhile, the Australasian Cans segment saw a 6.4% rise in earnings, supported by volume growth and ongoing cost efficiencies despite some softness in consumer spending.
Divestment of Closures Business and Shareholder Returns
In addition to the OPS sale, Orora entered into an agreement in November 2024 to sell its aluminium closures business based in Adelaide. The sale was completed in January 2025, with the business classified as held for sale at the half-year end. A loss of A$18.4 million before tax was recognized due to the remeasurement of assets to fair value less costs to sell.
Following these strategic moves, Orora declared an interim dividend of 5.0 cents per share, unfranked, payable on 3 April 2025. Approximately 25% of this dividend is sourced from the Conduit Foreign Income account, potentially reducing withholding tax for non-resident shareholders.
Balance Sheet and Debt Management
The proceeds from the OPS divestment have been partly used to repay drawn borrowings, including the prepayment of US Private Placement notes and bilateral facilities, resulting in a reduction of committed facilities from A$2.6 billion to A$2.2 billion. Orora also announced an on-market share buy-back program of up to 10% of issued capital, with initial purchases made during the period.
Looking ahead, the company maintains a strong balance sheet and liquidity position, positioning it to pursue growth opportunities while managing market uncertainties.
Bottom Line?
Orora’s strategic divestments and restructuring have reset its financial trajectory, but the impact of market shifts on its core glass operations warrants close watch.
Questions in the middle?
- How will the closure of the Gawler furnace affect Orora’s long-term production capacity and cost structure?
- What are the strategic growth opportunities Orora plans to pursue with its strengthened balance sheet?
- How might global demand trends in premium glass packaging evolve post-Saverglass acquisition?