Orora (ASX:ORA) share price slumps despite 34% profit surge

The Aussie manufacturer’s shares have fallen lower on Thursday morning

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The Orora Ltd (ASX: ORA) share price is slumping lower on Thursday morning after the company reported its latest full-year results.

Let’s take a closer look at what the packaging provider announced.

Orora share price falls despite growth figures

Orora reported its full-year results for the year ended 30 June 2021 (FY21), including the below:

  • Total sales revenue down 0.8% to $3,538.0 million (up 7.8% on a constant currency basis)
  • Earnings before interest, tax, depeciation and amortisation (EBITDA) up 5.9% to $369.3 million
  • Underlying net profit after tax (NPAT) up 23.7% (34.1% in constant currency) to $156.7 million.
  • Earnings per share (EPS) up 29.0% to 16.9 cents
  • Dividend per share up 16.7% to 14.0 cents

At the time of writing, the Orora share price has slumped by 3.63% to $2.25 despite these headline growth figures.

What happened in FY21 for Orora?

Orora reported stronger volumes in cans and closures in its Australasian business during the year with “significantly improved” financial performance in North America.

However, the company did report weakness in its glass segment. That was largely due to lower China exports and cost headwinds associated with energy and insurance impacted on earnings.

The Orora share price initially climbed in early trade following the release but is falling as the broader market retreats.

What did management say?

Managing director and CEO Brian Lowe said:

We were pleased to report an increase in both net profit after tax and underlying EBIT [earnings before interest and taxes], demonstrating a solid contribution from all of our business groups across Australasia and North America.

In Australasia, the increase in EBIT was largely a result of stronger volumes across cans and closures, partially offset by declines in glass as the impact of lower exports to China crystallised.

North America delivered a 43.0% increase in EBIT on a constant currency basis, reflecting the disclipined focus on cost control and profit improvement programs, as well as improved trading conditions in the second half of the year.

A strong balance sheet and cash flow provides the company with flexibility. We head into FY22 with positive momentum and the ability to invest where it will deliver the greatest long-term value.

What’s next for Orora and its share price?

Orora is forecasting EBIT for FY22 broadly in line with FY21. The company hopes strength in its cans business offsets the ongoing impact of Chinese tariffs on glass volumes.

The company is expecting “positive momentum” in the current financial year. However, its outlook remains subject to “global and domestic economic conditions, currency fluctuations and the continuing impact of the COVID-19 pandemic”.

Despite these challenges, the Orora share price has climbed 31% higher in 2021 and is outperforming the S&P/ASX 200 Index (ASX: XJO).

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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