This under-the-radar ASX 200 share just jumped 8% following solid half-year results. And it pays dividends!

This lesser-known company is actually a juggernaut in the manufacture of packaging products.

| More on:
a young man with a wide smile holds a glass bottle in one hand and holds his pointer finger up with the other hand as if indicating a successful outcome.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Orora is a low-key ASX 200 share that just gained 8% today after posting its half-yearly results
  • The company had a strong half with earnings growth exhibited throughout its P&L
  • Orora shares have climbed 28% in the last 12 months and are up another 2% this year to date.

ASX 200 shares are showing signs of a V-shaped recovery with the benchmark S&P/ASX 200 Index (ASX: XJO) climbing 57 basis points this past week.

To further illustrate, the Ishares Core S&P/ASX 200 ETF (ASX: IOZ) has climbed more than 1% during this time, as investors throw support behind the large end of the market once more.

In amongst the noise, there is a little-covered ASX 200 share that released its half-yearly results today and investors are piling in as a result.

At the time of writing, the Orora Ltd (ASX: ORA) share price is up 7.7% to fetch $3.57 on the back of its results for the half year ended 31 December 2021.

Orora touts itself as a leading sustainable packaging and visual solutions provider. It has a foothold in the design and manufacture of packaging products such as glass bottles, beverage cans, corrugated boxes, recycled paper, multi-walled paper bags, and point of purchase displays.

But this ASX 200 share isn't a small enterprise. At last check, it had a market cap of more than $3 billion and trades on a 4.2% trailing dividend yield.

Orora share price jumps as NPAT, EPS spike in 1H FY22

The company announced several investment highlights in its earnings release today, including:

  • Underlying earnings per share (EPS) came in at 11.8 cents per share, up 22.9% year on year
  • Underlying net profit after tax (NPAT), before significant items, was $102.7 million, up 12.9% year on year (13.6% on a constant currency basis)
  • Sales revenue was $1.98 billion, up 9.6% on the previous year (10.6% on a constant currency basis).
  • Underlying earnings before interest and tax (EBIT) was $154.5 million, up 10.4%
  • Operating cash flow came in at $145.5 million with cash conversion at 75%
  • Return on average funds employed (RoAFE) was 24.8%, up from 21.4% year on year.

What else happened for Orora this period?

The Group reported an increase in underlying NPAT and EBIT with the bottom line growing by 23% from the same time last year.

Orora says this demonstrates the "continued strength of the Group's diversified packaging assets and sustainable earnings".

Investors might recall that back in October 2021, Orora announced a $150 million on-market buyback. Today's release notes, as at 31 December 2021, the buyback is approximately 20% complete.

As a result, 9.3 million shares were bought at an average price of $3.37 per share for total consideration of $31.5 million, the company notes. According to the announcement, the buyback is forecast to be completed during 2022.

The company was also pleased with its Australasian business during the half. It says it largely avoided the impacts of Chinese wine tariffs, noting that "100% of this capacity [is] now redeployed to new product categories".

Orora also claims it is on track to achieve its "2025 goal of 60% recycled content in the glass packaging it manufactures".

It also says it is "well on track to achieving a 40% reduction in greenhouse gas emissions for Scope 1 and 2 by 2035 through a range of initiatives which include alternative furnace technologies".

Management commentary

Speaking on the announcement, Orora Managing Director and CEO Brian Lowe said:

I am pleased to report that Orora delivered a strong result for the first half of the fiscal year 2022. Our performance reflects the unwavering focus of our team on executing our strategic priorities in the context of a global pandemic. The Group reported an increase in underlying net profit after tax and underlying EBIT on the prior corresponding period, demonstrating the continued strength of the Group's diversified packaging assets and sustainable earnings. Our North American business produced another outstanding result in the first half, continuing to drive improvements in operating and financial performance, exercising pricing discipline in a higher inflation operating environment and delivering strong earnings growth in both the manufacturing and distribution OPS businesses.

What's next for Orora?

The company is forecasting FY22 EBIT to be higher than the full-year result of FY21. In its Australasia business, "EBIT growth is expected for the Beverage business in 2H22, with FY22 EBIT to be broadly in line with FY21".

Whereas in North America, "with sustained improvement in the performance of both OPS and OV, we expect 2H22 EBIT to be up on the [prior year] with continued strong earnings growth for the full year", it said.

Orora share price snapshot

Orora shares have climbed almost 28% in the last 12 months and are up another 2% this year to date.

In fact, the company's shares are in the green across all time frames, unlike the benchmark indices.

Motley Fool contributor Zach Bristow 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.

More on Share Gainers

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Share Gainers

3 ASX All Ords shares up 50%+ in March

These ASX shares have been on fire this month. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher

These shares are having a good session on hump day. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to earth for ASX shares this Tuesday.

Read more »

Two happy scientists analysing test results.
Healthcare Shares

Mesoblast share price rockets 36% on breaking FDA news

ASX investors are sending the Mesoblast share price soaring following promising FDA news.

Read more »