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Why Orora Ltd (ASX:ORA) shares are falling despite solid results

Shares in packaging company Orora Ltd (ASX:ORA) dived 4% in early morning trade to land at $3.44 off the back of its FY18 results release.

Orora announced a lift in underlying NPAT of 12% on FY17 – to $208.6 million with EPS up 11.5% to 17.4c per share.

Sales revenue has risen 5.2% and EBIT 7% with Orora reducing its net debt from $674 million to $667 million.

But the results have failed to impress the market, with Orora shares slipping, despite booking a strong result in the midst of flat trading conditions.

With a strong balance sheet as a foundation, Orora is focused on two separate power purchase agreements with renewable energy providers going forward. The deals are for long-term supply of renewable energy for volumes equivalent to 80% of Orora’s total electricity requirements in Australia.

It’s a smart move into renewables, following AGL Energy Ltd’s (ASX: AGL) lead with Cleanaway Waste Management Ltd (ASX: CWY).

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. 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 Scott Phillips.

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