The Orora Ltd (ASX: ORA) share price is surging higher from the open on Wednesday after the packing and distribution company posted its FY24 results.
Shortly after trading commenced today, the stock is swapping hands at $2.46 apiece, around 8% higher from the open.
Let's see what the company posted.
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Orora share price up 8% on mixed FY24 earnings
The company's key highlights from the year include the following:
- Sales revenue came to $4.7 billion, up 9.5% year over year. Excluding contributions from its Saverglass acquisition, sales revenue was down 7% to $4.0 billion.
- Pre-tax income of $404.0 million, up 26% year over year.
- Underlying net profit of $223.7 million, an increase of 10.2%.
- Final dividend of 5 cents per share announced, bringing the full-year dividend to 10.0 cents per share (payout ratio of 60.5%).
What else happened in FY24?
Orora faced several challenges throughout FY24, including lower customer demand for commercial wine, craft beer, and premium spirits, alongside persistent higher costs across the supply chain.
Customer "destocking" of inventories was also an issue, as many overbought during the supply chain issues of 2022. This didn't help the Orora share price.
The company's Orora Packaging Solutions (OPS) business in North America experienced a 2.7% decline in operating income due to softness in the broader manufacturing sector.
However, the global beverage business saw a 55% increase in operating profit, driven largely by Saverglass' contribution. The company acquired Saverglass during the year and has since created a global glass business covering Asia Pacific, Europe, and the Americas.
Orora is currently "in discussions" to potentially divest its OPS business, a move that could mould the company into more of a "beverage packaging business", it says.
Additionally, Orora rejected a non-binding takeover proposal from Lone Star Fund XII Acquisitions to acquire it, stating that the offer materially undervalued the company.
What did management say?
Orora's managing director and CEO, Brian Lowe, was pleased with the company's performance and strategic direction:
The past financial year was a transformative period for Orora, as we completed the acquisition of premium global glass business Saverglass, one of the most significant milestones in the company's history.
While economic headwinds persisted across a number of regions, Orora has reported EBIT of $404.0 million, up 26% which includes seven months of contribution from Saverglass, and was slightly ahead of our trading update issued in April.
What's next?
As to what's next for the Orora share price? Looking ahead to FY25, management expects profits for its OPS business to be "broadly in line " with its second-half revenues.
The Global Beverage segment is anticipated to see slightly lower earnings in Australasia due to a furnace rebuild at its Gawler site. However, growth in the Cans business is expected to offset this impact.
The Saverglass business is "positioned for volume recovery" as the destocking cycle winds down as well.
Orora share price snapshot
The Orora share price has fallen more than 33% in the past 12 months. In that time, it has lagged the broader S&P/ASX 200 index (ASX: XJO) by more than 40%.
