Orora Ltd (ORRAF) (FY 2025) Earnings Call Highlights: Strong EBITDA Growth Amidst Challenges
EBIT: $262.1 million, an increase of 9.5%.
Statutory NPAT: $973.1 million, including profit on sale for OPS.
Continuing NPAT: $151.1 million.
EPS: $0.114 per share.
Operating Cash Flow: $333.6 million.
Net Debt: $254 million with leverage at 0.7x EBITDA.
Final Dividend: $0.05 per share unfranked, total dividend for the year $0.10.
Cans Revenue Growth: 12.1% higher, or 8.9% excluding aluminum prices impact.
Cans Volume Growth: 6% for the year.
Saverglass Revenue Decrease: 16.5% with volumes down 12%.
Gawler Revenue Increase: 1.5%.
Group Revenue: Increased 24% to $2.1 billion.
Free Cash Flow Available to Shareholders: $97 million.
CapEx: $263 million for FY25, expected $200 million for FY26.
Dividend Payout Ratio: 69% of continuing operations for the half.
Warning! GuruFocus has detected 7 Warning Signs with ORRAF.
Release Date: August 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Orora Ltd (ORRAF) reported a strong EBITDA increase of 19.4% to $418.8 million, driven by a full year's contribution from Saverglass.
The Cans business experienced a 6% volume growth, with revenue increasing by 12.1%, excluding the pass-through impact of aluminum prices.
The company's balance sheet remains robust with net debt at $254 million and leverage at 0.7x EBITDA, supporting ongoing shareholder returns.
Orora Ltd (ORRAF) declared a final dividend of $0.05 per share, bringing the total dividend for the year to $0.10, and has made significant progress on its share buyback program.
The company is making substantial investments in capacity expansions, with a $350 million capital spend expected to deliver an incremental $50 million of EBIT by FY30.
Negative Points
The operating environment for the glass business, particularly Saverglass, remains challenging due to ongoing tariff issues and a 16.5% revenue decrease.
The Gawler facility was impacted by the G3 furnace shutdown, contributing to a decline in EBIT.
Higher depreciation costs, particularly from Saverglass, have partly offset EBITDA growth.
The company faces potential challenges from US tariffs on EU production, which could impact Saverglass' operations.
Orora Ltd (ORRAF) anticipates additional corporate costs of $7 million in FY26, which could temper EBIT growth.
Q & A Highlights
Q: Can you elaborate on the volume growth expectations for Saverglass in FY26 and whether it will be consistent across both halves of the year? A: Brian Lowe, CEO: The volume growth in the second half of FY25 was primarily due to new business in wine and champagne. We are not expecting a significant pickup in underlying consumer demand but are focusing on growing new business. The timing of demand is variable, and while historically the first half is stronger, it is difficult to project at the moment. We expect growth in specific segments other than spirits, which have a longer turnaround time.
Q: Why does the guidance for Saverglass imply only slight EBITDA growth despite higher volumes and cost reductions? A: Shaun Hughes, CFO: The slight increase in EBITDA is driven by cost actions and stable pricing. The mix shift towards wine and champagne, which have lower price points, affects the overall growth. We are assuming constant currency with FY25 for our outlook.
Q: Saverglass performed better than expected in the second half. What drove this positive surprise? A: Shaun Hughes, CFO: The team successfully drove volume growth in wine and champagne, achieving a 9% increase between the first and second halves. This growth, along with cost reduction efforts, contributed to the better-than-expected performance.
Q: How do you assess the risk of competitors moving into the ultra-premium segment of Saverglass? A: Brian Lowe, CEO: The ultra-premium segment remains stable, and we have not seen significant competitive pressure. The business model for ultra-premium is different, with unique configurations and quality standards. We are well-positioned, and our pricing is holding well.
Q: Can you provide insights into the sustainability of cost reductions at Saverglass, especially with the network changes at Le Havre? A: Brian Lowe, CEO: Most cost reductions are sustainable, including the EUR9 million savings from the Le Havre furnace closure. We have also reduced structural costs and worked with suppliers to lower costs. The profit-sharing arrangement is based on business performance, and we aim to maintain the reduced cost base.
Q: What are the key priorities for Orora in the next two to three years? A: Brian Lowe, CEO: The focus is on execution, particularly in the Cans business, where growth CapEx investments are nearing completion. For Saverglass, we aim to drive cost efficiency and instill global practices. We are not focusing on new areas but rather on optimizing current operations.
Q: How do you plan to manage the impact of tariffs on Saverglass in FY26? A: Brian Lowe, CEO: The 15% tariff on EU production is a recent development, and we are yet to receive feedback from customers. Our outlook assumes steady underlying demand, and we are pursuing opportunities to grow volume independently of tariff impacts.
Q: What factors give you confidence that demand for Saverglass is stabilizing? A: Brian Lowe, CEO: Customer-owned inventory levels have decreased significantly, indicating stabilization. Nielsen scan data shows a global decline in spirits demand, but we believe destocking is ending, and demand should stabilize to consumer levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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