Orora expects lower Group EBIT as Saverglass pressures persist

• FY27 Group EBIT expected to fall on lower Saverglass earnings and higher depreciation
• Cans EBIT expected to rise, with long-term volume growth of 4% to 6%
• €449.7 million non-cash impairment recognised against the Glass business
• Saverglass turnaround targets more than €30 million in net EBIT improvement by FY30
• Ras Al Khaimah production restarts at about 50% capacity via Oman shipping routes

FY27 Earnings Set to Decline Despite Strong Cans Growth

Orora Limited (ASX:ORA) has warned that Group EBIT will be lower in FY27, as weaker Saverglass earnings and higher depreciation outweigh another strong performance from its Cans business. The guidance, delivered at Orora’s annual general meeting on 14 October, leaves the packaging group with a clear split-screen problem: its Australian cans operations are expanding, while its international Glass business remains under pressure from pricing, product mix, tariffs and geopolitical disruption.

FY26 underlying EBITDA was broadly flat at $420.3 million, while EBIT fell 5.3% to $248.2 million and underlying NPAT declined 5.9% to $142.2 million. Operating cash flow remained comparatively resilient at $290.7 million, with 98.3% cash realisation. Shareholders also received support through the on-market buyback, with approximately $118 million spent repurchasing shares during the year. The AGM followed Orora’s FY26 impairment result, which included a large Glass impairment alongside robust Cans growth.

Cans Expansion Moves From Construction to Execution

The Cans division supplied the positive side of the result. Volumes rose 6.3%, revenue increased 13.3% to $880.0 million and EBITDA climbed 10.5% to $131.2 million. EBIT rose 7.3% to $111.4 million, supported by demand for energy drinks, carbonated soft drinks, alternative beverages and beer, as well as the continued shift towards aluminium packaging.

Orora expects Cans EBIT to be higher in FY27, with volume growth broadly consistent with its long-term 4% to 6% range. The Rocklea expansion is expected to be commissioned by the end of the first quarter and should eventually add about 13% to network capacity. The expansion program delivered approximately $21.7 million in annual EBIT benefits by the end of FY26 and remains targeted to generate more than $50 million annually by FY30. The challenge now is less about adding machinery than getting utilisation, earnings and cash flow to follow.

Saverglass Faces Another Year of Price and Mix Pressure

Saverglass volumes rose 5.9% in FY26, including 9% growth in the second half, but the increase was weighted towards lower-priced products. Revenue edged up 0.8% to €617.2 million, while EBIT fell by €16.4 million to €62.8 million as average selling prices and margins came under pressure. The business also absorbed disruption at its Ras Al Khaimah facility in the United Arab Emirates after shipping routes were closed amid the Middle East conflict, alongside the closure of the F4 furnace at Le Havre and the rebuild of the Ghlin facility in Belgium.

The company has now restarted Ras Al Khaimah on a restricted-volume basis using alternative ports in Oman, with production intended to run at approximately 50% capacity until the Strait of Hormuz reopens. That restart does not remove the financial burden immediately: idling costs were estimated at about €2 million a month before the October recommencement, with the charge expected to reduce as production increases. The operational disruption had already prompted Orora’s Saverglass forecast cut, when the company cited direct and indirect impacts from the Middle East conflict.

Glass Turnaround Carries a €30 Million Target

Orora recognised a €449.7 million, or $742.8 million, non-cash impairment against the Glass business in FY26. The company said the charge reflected the effects of the Middle East conflict, US tariffs and cost-of-living pressures, and acknowledged that the business’s performance and valuation had not met expectations at acquisition. The impairment does not reduce Group liquidity or the free cash flow available to shareholders in FY27, but it resets the financial starting point for the turnaround.

Management has outlined six priorities aimed at delivering more than €30 million in net EBIT run-rate improvement by FY30: accelerating new business, shortening product development times, improving pricing and product profitability, lifting operational and procurement efficiency, reducing overheads, and tightening inventory and cash management. FY27 EBIT for Saverglass is nevertheless expected to be below FY26, with earnings weighted to the second half. First-quarter volumes were modestly below the prior corresponding period, and management said volume growth and cost savings had so far been more than offset by pricing and mix pressures.

Gawler Benefits From Two-Furnace Operation

Gawler provides a more constructive Glass datapoint. Revenue was broadly flat at $284.5 million as volumes fell 2.1%, largely reflecting weaker beer demand, but EBIT increased 10.5% to $28.1 million. The move from three furnaces to two generated efficiency benefits, including a reported 31% reduction in energy use at the G3 furnace. Orora expects Gawler EBIT to reach about $30 million in FY27, its first full year under the two-furnace configuration.

The AGM also put shareholder accountability and operational risk plainly on the record. No short-term incentive payments were made to key management personnel for FY26, and the FY24 long-term incentive grant did not vest because performance hurdles were not met. Separately, a contractor fatality at Orora’s Acatlán site in Mexico on 15 July will be included in FY27 safety reporting, while the company said corrective and preventative actions had begun across its operations. Orora’s next test is whether the Cans expansion can keep compounding while the Glass plan turns targets into measurable margins rather than another year of explanations.

Bottom Line?

Orora enters FY27 with a stronger Cans platform but a weaker Group earnings outlook. The key evidence will be whether Rocklea delivers its promised capacity benefits while Saverglass converts its €30 million improvement plan into actual EBIT.

Questions in the middle?

• Can Rocklea’s additional capacity translate into the targeted earnings uplift as depreciation rises?
• How quickly can Saverglass improve pricing and product mix in markets still affected by tariffs and weak demand?
• Will the Ras Al Khaimah restart progress beyond 50% capacity without further geopolitical disruption?