Orora Limited (ASX:ORA) has announced financial results for the half year ended 31 December 2019.
Good progress is being made to complete the sale of the Australasian Fibre Business and to address the ongoing challenges faced by the North American businesses.
Commenting on his first results, Orora Managing Director and CEO, Brian Lowe, said: “A challenging first half for the Group, with subdued economic conditions across Orora’s geographies impacting earnings. While we were pleased to deliver a positive first half in Australasia, North America earnings were lower compared to the prior corresponding period, reflecting continued tough trading conditions in that region.”
“In Australasia, Orora’s market leading Beverage business continued its track record of earnings growth. The earnings improvement was driven by a solid performance in Cans with volume growth in craft beer and a continuing switch by consumers toward can formats, which was largely offset by higher input costs and adverse mix in the Glass business. Volumes in Glass were in line with the prior period.
“In North America, constant currency earnings were lower, with the subdued trading conditions experienced in FY19 continuing into FY20. In response, a comprehensive improvement program has been implemented in Orora Packaging
Solutions (OPS) to drive efficiency, volume and margin growth and reset the cost base to align with prevailing market conditions. These initiatives are showing early, positive signs, with OPS profit margins improving compared to the second half of FY19. In Orora Visual (OV), where an improvement program is also underway, it was a difficult trading period due to a number of factors including customer deferral/removal of summer campaigns and softness in some key market segments.
“Orora’s strong cash flow capability, combined with the strength of its balance sheet, continues to provide the Company with capacity and flexibility to invest in innovation as well as organic and new growth opportunities that deliver long term, sustainable value.
“In this regard and with the sale of the Australasian Fibre business now being close to completion, Orora has commenced a review of the strategy for the continuing businesses, including assessing growth options to leverage existing competitive positions and points of difference in key market segments. It is important that Orora takes this opportunity to assess and shape the strategic path ahead for the Company.
“As previously announced, post completion of the sale of the Australasian Fibre business, Orora intends to return approximately $1.2 billion to shareholders and is currently working with the regulatory body to ensure the most efficient return of funds to shareholders. Options include a cash return, comprising part capital return and a partially franked special dividend, and an on-market share buyback. Further details regarding the timing and nature of the capital management initiatives will be provided in due course,” Brian said.