Packaging giant Orora has grown its full-year net profit after tax by 12 per cent, reaching A$208.6m ($232.5m) from the 2016/2017 result of A$186.2m, in a set of positive results.
Sales revenue for the FY rose 5.2 per cent, reaching A$4.2bn, while EBITDA grew 6.4 per cent, reaching A$445.3m. Earnings before interest and tax grew seven per cent to $323.4m.
Split by region, both Australasia and North America grew revenues by 5.2 per cent, with North American revenues slightly edging out ahead at A$2.14bn, with the remaining A$2.10bn coming from local shores. Overall, Australasia increased EBIT by $18.7m, an 8.7 per cent boost from the previous corresponding period, reaching $232.3m.
Orora made substantial investments in the full-year, adding an EFI Nozomi single-pass digital corrugated press to both its Australasian and North American manufacturing sites, the third and fourth purchased and installed worldwide.
It has also made moves to shield itself from the volatile pricing of the Australian energy market, making Power Purchasing Agreements (PPAs) across South Australia, Victoria, and NSW. In NSW alone, Orora estimates the higher electricity prices had a $4.5m impact on its costs.
Nigel Garrard, chief executive at Orora, says, “We invested A$140m in Australasia, bringing it to a total of A$500m since 2013. It shows we are confident in manufacturing in Australia and New Zealand. The PPAs we have signed for wind in South Australia, Victoria, and NSW will supply 80 per cent of Orora’s energy needs in Australia.
“The issues that we had of pricing, and volatility of pricing in summer have been addressed. We needed consistent supply, availability, and predictable pricing.”
Weighing into the energy policy debate, Garrard says, “Orora is not ambivalent around the National Energy Guarantee (NEG). There have been multiple years with no policy decisions made by the State or National governments for energy. The NEG will give people certainty with investments, so they are able to commit.
“I hope reason prevails and we get the NEG, as it is a sad state of affairs when Australia is one of the biggest exporters of Liquid Natural Gas (LNG), but does not benefit from it. We are looking at options to secure a gas supply past 2019, as our glass plant in SA relies on it for the high temperatures needed.”
As for trends and changes in Orora’s packaging markets, Garrard expects backlash against sugars to feed into transformation of its can printing business, noting a shift for producers towards low or no sugar options, and a move away from traditional 375ml cans, to smaller, sleeker sizes.
Garrard also sees the local market as benign, with pockets of growth, and says the company expects the economic conditions of the past two years to continue into the next 12 months.
