Australian glass and can manufacturer, Orora, has said it has completed its portfolio simplification and is focusing on cost reductions to help the company to offset challenging market conditions.
In announcing its results for the first half of the 2025 financial year, Orora said its sale of Orora Packaging Solutions (OPS) to Veritiv Corporation in September last year has given the business a strong balance sheet, which is enabling capital management.
Commenting on Orora’s first half results, Managing Director and Chief Executive Officer, Brian Lowe said: “In the first half of FY25 we continued to transform the Orora Group, simplifying our portfolio through the sale of the OPS business as well as the sale of the Closures business. This now enables us to focus on the global beverage industry through our marketleading Glass and Cans offerings.
“With a strong balance sheet following the OPS transaction, we have reduced debt and are returning value to shareholders through an on-market share buyback. We are now focused on organic growth opportunities, particularly through capacity expansion of the Cans business and leveraging our Global Glass network to cater for all segments of the beverage industry.
“Market conditions remain challenging globally. Against this backdrop, the Group reported EBIT of $120.8m, up 24.6 per cent, driven by the inclusion of six months of Saverglass earnings, compared to one month in the pcp.
“Excluding Saverglass, EBIT was $58.4m representing a decrease of 30.1 per cent. This was largely due to the G3 furnace shutdown at Gawler which was hampered by bad weather and equipment delays, impacting EBIT by $24m. De-stocking across the Saverglass business continues, and while we have noted some encouraging signs of improved order intake, the pace of recovery in Europe remains uncertain.
“Orora has managed softness in commercial wine and beer volumes in Australia for several years, and in light of this has undertaken a review of glass capacity across the Australasian market. This has resulted in the decision to move from a three furnace to two furnace operation at Gawler, and close our oldest furnace, the G1 furnace, in the second half of calendar year 2025. In turn, some existing production volumes will be redirected to our manufacturing site in the UAE. Furthermore, we plan to invest in modernising our Ghlin glass manufacturing site in Belgium, where all European wine and champagne bottles will be produced.
“We are pleased to report the performance of the Australasian Cans business on a standalone basis. This business again performed strongly, delivering strong growth with EBIT and revenue increasing more than five per cent, despite modest volume growth, which reflected subdued consumer spending. We continue our program of capacity expansion across the Cans network, with a second line at Revesby NSW commissioned late in 2024.
“Preliminary works have commenced on a new line at Rocklea Queensland, as announced following the sale of OPS. This expansion program will facilitate further organic growth and leverage the ongoing preference shift to cans for some beverage categories.”
In looking ahead Orora said in its results announcement: “We expect group EBIT for the second half of FY25 to be broadly in line with the second half of FY24 (continuing operations) with each business improving compared to the first half of FY25. For Gawler, G3 is fully operational and there will be no further impact from the G3 rebuild. Volumes are seasonally lower in the second half compared to the first with the structural challenges of commercial wine to remain.
“The focus remains on new capacity additions with Revesby commissioning and the commencement of the Rocklea expansion. As always, this outlook remains subject to global and domestic economic conditions, currency fluctuations and the potential of US tariffs.”