Why the Orora Ltd share price is rising today 

Shares in packaging maker and distributor Orora Ltd (ASX: ORA) enjoyed a strong start in today’s trade, up nearly 2% this morning. The Orora share price has risen by more than 12% over the past year, but if you include the healthy dividends Orora paid its shareholders in 2015, its shares have returned more than 16% in the period.

Why did this happen to Orora shares?

This morning, Orora announced a strong result for the six months ending 31 December 2015. Net profit after tax surged by more than 27% to $87.9 million.

That’s an impressive headline figure, but Orora’s revenue growth of 13.9% is nothing to be sneezed at. The packaging maker deserves a tick for leveraging sales growth with business improvement and cost control to deliver robust earnings and operational cash flow. It’s also worth noting that nearly $6 million of Orora’s net profit came from selling land at Petrie in Queensland.

With market conditions in Orora’s Australasian business relatively flat, the bulk of the profit growth came from the North American market. The weaker Aussie exchange rate to the US dollar made Orora’s US divisional earnings look better, while the low price of oil seems to have helped Orora minimise fuel and transport costs.

Orora capped its result with an interim ordinary dividend of 4.5 cents per share, up nearly 29% on last year. Today’s announcement should please shareholders drawn more recently to Orora’s defensive earnings profile, as well as those who have owned the stock since it demerged from Amcor Ltd (ASX: AMC) in late 2013.

What’s next for Orora Ltd?

It’s pleasing to see Orora deliver a result like this in the face of global economic conditions that are muted at best and volatile at worst. The firm expects to continue to drive organic growth in 2016 as its glass business sees stronger demand, group productivity improves and acquisition opportunities present themselves. It’s not hard to see why investors have been happy to bid up the Orora share price today.

Foolish takeaway

16% is a very healthy annual return for a $2 billion stock caught in a bear market. This week, Orora and its former parent Amcor have both shown that unsexy businesses can generate strong returns in dicey economic conditions. That’s why these kinds of defensive stocks never fall too far from favour — and it’s what can make them a sensible long-term investment.

The technology that's going to REPLACE the Internet is already here...

Dollar for dollar, insiders are calling it one of the biggest new markets in the history of modern business... NOW is the time to get in on the hush-hush industry that could be poised for growth of over 4,463%+ by 2020... And the 1 ASX stock that stands to grow YOUR money right alongside it! Simply click here to learn its name.

Motley Fool contributor Tim Dorhmann has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.