Orora’s Half Year Financial Results 2025

Half Year Ended 31 December 2024 

Commenting on Orora’s first half results, Managing Director and Chief Executive Officer, Brian Lowe said:

“In the first half of FY25 we continued to transform the Orora Group, simplifying our portfolio through the sale of the OPS business as well as the sale of the Closures business. This now enables us to focus on the global beverage industry through our market-leading Glass and Cans offerings.

“With a strong balance sheet following the OPS transaction, we have reduced debt and are returning value to shareholders through an on-market share buyback. We are now focused on organic growth opportunities, particularly through capacity expansion of the Cans business and leveraging our Global Glass network to cater for all segments of the beverage industry.

“Market conditions remain challenging globally. Against this backdrop, the Group reported EBIT of $120.8m, up 24.6%, driven by the inclusion of six months of Saverglass earnings, compared to one month in the pcp.

“Excluding Saverglass, EBIT was $58.4 million representing a decrease of 30.1%. This was largely due to the G3 furnace shutdown at Gawler which was hampered by bad weather and equipment delays, impacting EBIT by $24 million. De-stocking across the Saverglass business continues, and while we have noted some encouraging signs of improved order intake, the pace of recovery in Europe remains uncertain.

“Orora has managed softness in commercial wine and beer volumes in Australia for several years, and in light of this has undertaken a review of glass capacity across the Australasian market.  This has resulted in the decision to move from a three furnace to two furnace operation at Gawler, and close our oldest furnace, the G1 furnace, in the second half of calendar year 2025. In turn, some existing production volumes will be redirected to our manufacturing site in the UAE. Furthermore, we plan to invest in modernising our Ghlin glass manufacturing site in Belgium, where all European wine and champagne bottles will be produced.

“We are pleased to report the performance of the Australasian Cans business on a standalone basis. This business again performed strongly, delivering strong growth with EBIT and revenue increasing more than 5%, despite modest volume growth, which reflected subdued consumer spending. We continue our program of capacity expansion across the Cans network, with a second line at Revesby NSW commissioned late in 2024. Preliminary works have commenced on a new line at Rocklea Queensland, as announced following the sale of OPS. This expansion program will facilitate further organic growth and leverage the ongoing preference shift to cans for some beverage categories.”

Sale of OPS and portfolio simplification

The sale of the OPS business was completed in December, strengthening Orora’s balance sheet, with proceeds used to pay down debt and return funds to shareholders via an on-market share buy-back. In January, the sale of the Closures business was completed for a value of $20 million. These transactions enable Orora to become a specialised global beverage packaging provider, with Global Glass and Australasian Cans.

On-market share buy back

On 10 December 2024, Orora announced an on-market buyback of up to 10% of issued shares. This equates to approximately $320m. The buyback commenced 24 December 2024 and will resume following the results announcement on 13 February 2025.

Glass Production Capacity Review

The Australian commercial wine market has been in structural decline for several years, with declines greater than growth opportunities from exports to China or new products such as food jars. In light of this, Orora has undertaken a review of production capacity in Australia. As a result of this review, the Gawler site in Australia will transition from three furnaces to two, and the G1 furnace will be closed in the second half of calendar year 2025. Some production volumes will be redirected to the Ras Al-Khaimah site in the UAE to meet customer demand. A two-furnace operation will improve utilisation and efficiency at the site and lower costs overall.  

Orora has also reviewed its capacity requirements for Saverglass to determine its future needs. Ongoing capacity requirements will be evaluated with lower European demand, and short-term actions have been taken to reduce costs. Orora plans to invest in the modernisation of the Ghlin manufacturing site in Belgium, which would result in it becoming the most economic furnace for European wine and champagne bottle production. Accordingly, all European wine and champagne bottle production would be consolidated at this site enabling capacity at Ras Al-Khaimah to be utilised for the Australasian and US markets.

 Sustainability

Orora continued to make good progress across its sustainability program, with goals aligned to the pillars of Circular Economy, Climate Change and Community. We remain well on track to meet our target of 60% recycled glass in new glass products in Australia this financial year. A significant highlight for the half was the commissioning of the rebuilt G3 at Gawler, powered by oxyfuel technology. The new furnace is delivering up to 30% reduction in energy use and close to 30% reduction in CO2 emissions. It will contribute to Orora achieving its interim goal of a 40% reduction in greenhouse gas emissions for Scope 1 and 2 by 2035.

Work is underway on implementing Scope 3 emissions reporting, and an update will be provided with the full year results. Additionally, new Group-wide Circular Economy and Climate Change goals will be announced for both Saverglass and Australasian Cans. Saverglass’ sustainability program is comprehensive and aligns well with Orora’s sustainability agenda. A program of furnace hybridisation in Europe is progressing well, with a pathway to 50% electrification of new furnaces by 2027.  

More information about our results for the half year ended 31 December 2024 is available under ASX releases.