Orora acquires for profit

Packaging giant Orora Group has announced a net profit after tax increasing 12.3 per cent to $92.1m for the half-year ended 31 December 2016.
 
The company also confirmed it has signed definitive agreements to acquire The Garvey Group and Graphic Tech businesses for US$54m ($71m) as part of growing its North American Point of Purchase business.
 
Nigel Garrard, managing director and chief executive at Orora, says, “Both the results and acquisitions demonstrate the company’s focus on driving shareholder value and investing for future growth.”
 
Operationally, Orora delivered EBIT growth of 9.3 per cent. It says earnings were driven higher by improving Group-wide operational efficiency and cost control initiatives, solid sales growth in Orora North America, from both Orora Packaging Solutions (OPS) and an on-target contribution from IntegraColor (Point of Purchase business acquired in March 2016).
 
Garrard says, “Through continued financial discipline, Orora has been able to convert the growth in earnings into increased cash flow and improved returns, further strengthening the balance sheet and creating a strong platform from which to invest for future growth.”
 
Orora Australasia delivered a 3.3 per cent increase in EBIT to $109  led by organic initiatives which delivered underlying earnings growth of approximately $10m. The company says this was largely offset by cost pressures (mainly energy) in glass and the Botany Recycled Paper Mill of approximately $7m.
 
Orora North America delivered a 24.7 per cent increase in local currency EBIT to US$41.4m, driven by a 13.1 per cent growth in sales revenue to US$740m. Garrard says, “Orora continues to invest for future growth, both organically within the core businesses and through bolt-on acquisitions to build regional capability and scale in North America. Since listing three years ago, Orora has announced growth investments of approximately A$380m.
 
“Today’s acquisitions of The Garvey Group and Graphic Tech businesses for US$54m complement the January 2017 acquisition of The Register Print Group (US$44m) and are further examples of Orora’s growth investment strategy.
 
“The latest acquisitions are strategically important in growing the North American Point of Purchase business as they expand Orora’s coverage in the US, providing a national manufacturing and fulfilment footprint able to serve corporate customers across multiple locations.
 
“Orora’s Point of Purchase business will now be generating approximately US$230 million in revenue and will offer a unique value proposition in the US market, which we believe will be a compelling factor for customers seeking a full range of product and service requirements across multiple locations.”
 
The company adds that $42.0m investment to increase the manufacturing output of the Gawler glass furnaces is on target for completion by March 2017 and the A$20.0 million state-of-the-art dairy sack line at Keon Park (Victoria) commenced production during the period.
 
Garrard adds, “Orora expects to continue to drive organic growth and to invest in both innovation and growth opportunities during the remainder of FY17, with earnings expected to be higher than reported in FY16, subject to global economic conditions.”