Double-digit growth and increased organic investment programs were the focus of Orora's first half FY 18 results announcement.
Orora's track record of delivering strong and sustainable earnings growth has yet to falter in its short history since gaining its independence from Amcor in 2013. Its latest results announcement reveals another period of double digit growth (see summary of results highlight below), with increases in profit (14.8%) and sales revenue (6.8%) despite flat markets, particularly in Australasia.
Managing Director and CEO, Nigel Garrard, said the successful performance was driven in the first half by organic growth in the group’s core businesses and enhanced by the benefits now beginning to flow from recent acquisitions and capital investments to deliver customer led product solutions and improve productivity.
He made several important announcements around investment in growth and innovation, including a $30m boost to the Orora Global Innovation Initiative, which has seen $45m invested to date since it kicked off in 2015.
The extra $30m is to allow the group to "continue the focus on bringing new, innovative customer led product solutions to life, whilst improving productivity in the plants", according to Garrard.
He also noted that in the December half $93 million was invested in organic capital projects and innovation to drive sustainable growth across the group's businesses.
A big chunk of this ($30m) was spent for the ongoing asset refresh program in the Australasian Fibre Packaging business, bringing the cumulative investment commitment for this program to over $100 million over the past two years.
The Fibre Packaging division will also benefit from a ‘state of the art’ high speed large format digital printer (on of six new EFI Nozomi digital presses being rolled out globally, and a first for Australia) to be installed by May at its Oakleigh facility in Victoria. Orora has purchased a secong Nozomi press for its Orora Packaging Solutions Business in the US.
The B9 mill in Botany has seen $8m invested in a new secondary water treatment plan, due for commissioning in March this year.
In the Beverage division, further investments have been made in a new small can format capacity at Beverage Cans (NZ), while the Gawler facility in South Australia now boasts ‘world first’ automated swabbing technology and state of the art automated laser mould cleaning machines, both designed to improve productivity and safety.
In a final significant announcement, Garrard shared that Orora has a new agreement in place that will see its South Australia energy supply requirements met by wind-generated electricity from global renewable energy provider Pacific Hydro. Read more here.
RESULTS HIGHLIGHTS
Underlying Operating Results Highlights
-
Net profit after tax (NPAT) of $105.7 million up 14.8% on the prior corresponding period (pcp)
-
Earnings per share (EPS) up 14.7% to 8.8 cents on pcp
-
Sales revenue was up 6.2% to $2,097.8 million
-
Earnings before interest and tax (EBIT) was $165.3 million, up 10.5% on pcp
-
Interim ordinary dividend is 6.0 cents per share, 30.0% franked, up 20% on pcp
-
Operating cash flow was $155.9M, broadly in line with pcp
-
Gross organic capex of $93 million, representing 150% of depreciation
-
Leverage is 1.5 times, down from 1.6 times at 30 June 2017
Statutory Results
-
Statutory net profit after tax (NPAT) was $103.8 million
-
Significant item expense after tax of $1.9 million related to net profit on sale of Fibre Packaging’s Smithfield site offset by costs related to the restructure of Fibre Packaging in NSW including the closure of the Smithfield site and potential additional decommissioning costs
