Orora Packing a Punch With Growth Initiatives

Australia | May 04 2022

Capacity expansion and acquisition activity look to support Orora’s guidance to prioritise growth over returns in its near future.

-Commentary from Orora points to growth over returns moving forward
-Sustainability trends should support expansion in canning and packing lines
-The company appears keen to pursue small acquisition targets in the US

By Danielle Austin

A period of growth through reinvestment looks to be ahead for global packaging solutions provider Orora ((ORA)), with the company outlining an intention to reinvest in itself through organic and inorganic means moving forward in an effort to prioritise growth over capital returns. The company has committed to a $220m investment in growth capital expenditure over the next three years.

Moving forward, company strategy looks to take advantage of continuing demand for sustainable packaging solutions, with the company pursuing an $85m expansion at its Revesby facility to enable a second can line and address heightened demand, with completion of the project expected in FY25. The investment follows an $80m expansion at its Dandenong can facility, which is due for completion in FY23, which combined should allow for a 20% increase in domestic can capacity.

In a bid to maximise benefit from continuing sustainability trends, the company will not only expand can capacity and continue to support demand for fibre packing solutions, but Orora is also targeting a goal of 60% recycled content in its glass beverage packaging by 2026. With a glass furnace rebuild due in 2024 the company plans for an upgrade to include oxy fuel technology that will enable a -20% carbon emissions reduction.

Management at the company continues to guide to full year earnings growth, with earnings momentum continuing into the second half. The company continues to hold a strong market position, with a 65% share of the domestic cans market making it the market leader in Australia, and despite an inflationary environment has been able to manage cost inflation in both the United States and Australia through price increases.

Stability in the US, but growth on the horizon

With the integration of the SAP system completed, Orora’s US-based operations are experiencing a period of relative improved stability and solid demand, but the company has indicated inorganic growth through merger and acquisition activity is ahead for the region.

With customer numbers reducing -20% benefits of the SAP system integration are appearing, with the reduction allowing a clearer focus on margins and custom packaging solutions expected to deliver further margin improvement, according to the company. Orora expects second half earnings for the US will be up on the previous comparable period.


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