its drop in earnings
The Covid-19 pandemic has adversely affected Orora's business

Packaging giant Orora has attributed the Covid-19 pandemic on its drop in earnings for 2020.

The company reports an underlying net profit after tax of A$127.7m, down 22.8 per cent from the previous corresponding period.

Underlying earnings before interest and tax fell 4.3 per cent from last year. Some 90 per cent FY19 of its drop in earnings occurred in the US.

Locally, Orora Australasia delivered sales revenue of A$785.9m. Its earnings before interest and tax fell 7.4 per cent on the previous corresponding period. It attributes the decline to the G2 build and Covid-19.

Adjust, adapt, and target

Brian Lowe, managing director and chief executive, says Orora has managed to adjust, adapt, and target its operations. He says, “Orora maintained its strong focus on investment in the Australasian beverage business during the period with the successful rebuild of the G2 furnace and capacity expansion of the Gawler Glass site, which forms part of an estimated A$200m investment in this facility over the last five years.

“The business also introduced innovations relating to digital printing of cans and embossing of closures during the period.

“While the Australasian beverage business saw solid growth in cans volumes and was largely able to mitigate the impact of Covid-19, there was some unfavourable product mix across both glass (imported product) and cans and lower glass (wine exports) volumes, which combined with the adverse earnings impact from the G2 build, resulted in lower FY20 earnings.

“The trading conditions in North America were already tough. The emergence of Covid-19 saw both Orora Packaging Solutions and Orora Visual results further adversely impacted. As a result, earnings were down on the prior year.”

Orora has completed the sale of its Australasian fibre business. It has also finalised the review of its strategy, reduced debt, and returned A$600m to shareholders. It company expects the challenging and uncertain market conditions to persist for the foreseeable future.

Despite the pandemic, Orora’s business qualifies as an essential service in both Australasia and the US. It can therefore continue its operations.

Lowe adds, “The focus is on leveraging the Australasia beverage capabilities via exploring footprint expansion and complementary products and services. Separately, the medium-term priorities for the North American business will be to drive organic improvement initiatives including enhancing digital capabilities and productivity.

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