Orora’s North America EBIT (earnings before interest and tax) declined 12.5 per cent to $50.5 million, due to a range of factors including lower volumes and margins for its North America packaging business, and higher raw material costs.
Orora’s total group sales actually rose 16.9 per cent to $1.84 billion, driven mainly by acquisitions in North America.
Mr Lowe said Orora was “on the right side of the sustainability packaging trends, particularly in Australasia”, and that the company recycled about 80 per cent of glass returned in South Australia under that state’s container deposit scheme.
“We are actively exploring opportunities to economically source recycled glass for Gawler (recycling plant) from other states as they introduce container deposit schemes as well,” he said.
“As container deposit legislation is coming in, the ability to source cleaner supply of glass has gone up dramatically,” he said.
Mr Lowe said Orora had “a lot of headroom” in terms of capacity to recycle more glass.
Orora is also moving closer to finalising the $1.72 billion sale of its Australasian fibre business, which recycles cardboard and corrugated boxes, to Japan’s Nippon Paper. The deal is set to be completed this quarter.
The sale will generate about $1.2 billion of returns to shareholders, which Orora said on Wednesday could be funnelled via a cash return that could include part capital return and a special dividend, and an on-market share buyback.
“All in all the (Orora) result was a little bit weaker, mainly driven by the weaker North American business, where the margin was pretty tough. The Australian business is actually not too bad,” said Jun Bei Liu, portfolio manager with Orora investor Tribeca Investment Partners.
In other news Orora announced that its inaugural chairman, Chris Roberts, had retired from the board. He will be succeeded by Rob Sindel, a former CEO of building products company CSR, who joined Orora’s board last year. Another board member, John Pizzey, will retire from the board at the end of May.
Orora will pay a 6.5 cent interim dividend on April 9, which is the same as the 2018-19 first half dividend. Shares in Orora closed down 4.1 per cent at $3.01.
Meanwhile, industry peer Amcor reported net income for the half of $252 million, up from $237 million in the prior corresponding period. “Amcor delivered a good first-half result and our outlook for fiscal 2020 adjusted
EPS (earnings per share) growth has improved to 7-10 per cent,” said chief executive Ron Delia.
Darren is the mining and agribusiness reporter for The Age and The Sydney Morning Herald.