Orora delivers strong FY22 results with “robust earnings in Australia”

Sustainable packaging solutions company Orora (ASX: ORA), has announced its FY22 financial results for the year ending 30 June 2022, reporting a sales revenue of $4.09 billion, up 15.6 per cent from last year, and a statutory net profit after tax (NPAT) of $184.7 million, up 36.0 per cent YoY.

Its net profit after tax before significant items (underlying NPAT) was reported at $187.1 million, up 19.4 per cent YoY, while its underlying earnings before interest and tax (EBIT) was $285.5 million, up 14.6 per cent YoY.

Orora managing director and CEO Brian Lowe said the strong result for the fiscal year 2022 reflects the execution of the company’s strategic priorities in the face of global supply chain and inflationary challenges.

He added that the significant increase in underlying EBIT and net profit after tax was driven by strong revenue and earnings growth in North America, with continued robust earnings in Australia.

“Our North American business again delivered an impressive improvement in both financial and operating performance, with an increase in revenue and earnings largely driven by an ongoing focus on business optimisation, customer account profitability and a relentless focus on managing inflationary inputs and cost to serve,” he said.

“Our Australasian business performed solidly – the team has done a commendable job of managing inflationary cost pressures and supply chain disruptions to deliver revenue growth and earnings that demonstrate the resilience of the Beverage business.

“Following significant volume growth in the prior year, cans saw a slight improvement in product sales mix and volumes, while the glass business successfully expanded into new product ranges to mitigate the impacts of lower wine volumes due to the Chinese wine tariffs on Australian wine exports.

“I am incredibly proud of the entire team’s performance – we have delivered against our corporate strategy while remaining agile in response to external challenges as they have emerged.

“With a strong balance sheet and operating cash flow we are making significant investments in initiatives that will continue to sustainably grow our business and deliver for shareholders in FY23.”

The company also outlined its sustainability initiatives, saying it has made good progress on its sustainability goals aligned to the pillars of circular economy and climate change.

Under the circular economy pillar, Orora said is on track to achieve its 2025 goal of 60 per cent recycled content in the glass packaging it produces. In FY22 the company achieved 38 per cent recycled content in its manufactured glass packaging, an increase from 31 per cent in the prior year.

Construction of the new ~$25 million glass beneficiation plant at Gawler, South Australia is also complete and will be commissioned by the end of August, significantly increasing the recycled content in the company’s glass packaging and reducing greenhouse gas emissions.

“Orora is on track to achieve a 40 per cent reduction in greenhouse gas emissions for Scope 1 and 2 by 2035 through a number of initiatives, including a significant investment in sustainability with the move to oxyfuel technology as it upgrades its G3 furnace, an Australian-first, to be completed in 2024,” it said.

Moving forward, Orora expects its earnings to be higher in FY23, reflecting the resilience of the business in what is expected to be a challenging year of economic conditions.

In Australasia, EBIT is expected to be broadly in line with FY22, with 1H23 impacted by inflationary cost increases ahead of further 2H23 customer price recovery.

In North America, further EBIT growth is expected reflecting the full year impact of FY22 price increases and continued implementation of profit improvement programs.

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