Orora Targets >15% Returns on Cans Expansion with FY25 EBIT Steady

Focused Beverage Packaging Strategy

Orora Limited has reaffirmed its position as a leading player in the beverage packaging sector, emphasizing its transformation into a focused value-added business. The company’s portfolio now centers on cans, premium spirits and champagne, and wine packaging, with market-leading positions across these segments. This strategic focus is designed to capture long-term volume growth trends, estimated at 4-6% for cans and 3-6% for premium spirits and wine packaging.

Trading Update and Operational Highlights

In the first half of FY25, Orora reported a return to long-term volume growth rates in its cans business, supported by the commissioning of new capacity at Revesby and ongoing expansions such as the Rocklea project scheduled for completion in 2H26. This expansion is expected to generate returns exceeding 15% and add more than $50 million in EBIT in real terms post-completion.

Meanwhile, Saverglass, Orora’s premium glass business, experienced modest volume growth tempered by a shift in product mix towards higher-end wine and champagne. The business continues to navigate tariff uncertainties impacting European producers, with order intake softening in recent months. Cost reduction initiatives, including resizing the Le Havre site and transitioning to a two-furnace operation at Gawler, are underway to enhance efficiency and margin resilience.

Glass Network Optimisation and Capacity Management

Orora is actively optimising its glass production network to align with evolving market dynamics. The planned closure of the Le Havre furnace and the rebuild of the Ghlin plant in Belgium are key components of this strategy, aimed at reducing emissions and improving operating leverage. In Australia, the Gawler facility has transitioned to a two-furnace operation, closing the high-cost G1 furnace to better match declining commercial wine volumes and improve cost structures.

Capital Allocation and Financial Outlook

FY25 guidance anticipates second-half EBIT to be broadly in line with the prior corresponding period, before the reallocation of corporate overheads following the sale of Orora’s OPS business. Capital expenditure has been revised down to $285-295 million, reflecting the completion of major growth projects and a focus on disciplined investment. Net finance costs are expected to remain stable around $65-70 million.

Orora’s capital allocation framework prioritizes strong cash realisation, maintaining investment-grade credit metrics, and maximising shareholder returns through dividends and share buybacks. The company targets a leverage ratio between 1.5 and 2.5 times net debt to EBITDA and a dividend payout ratio of 60-80% of underlying net profit after tax.

Looking Ahead

With growth capex projects nearing completion and no further capacity expansion required until after 2030, Orora is poised to enter a stronger free cash flow period post-FY26. The company’s strategic focus on premiumisation, sustainability, and operational efficiency positions it well to navigate market uncertainties and capitalise on evolving consumer trends.