Global packaging company Orora reported a strong result with net profit after tax increasing 12.3% to $92.1 million for the half-year ended 31 December 2016.
Operationally, the company delivered EBIT growth of 9.3% despite “flat economic conditions” and input cost headwinds, such as escalating energy prices in Australia.
According to Orora’s report, earnings were driven higher by improving Group-wide operational efficiency and cost control initiatives, solid sales growth in Orora North America, from both Orora Packaging Solutions (OPS) and an on-target contribution from IntegraColor (Point of Purchase business acquired in March 2016).
“Through continued financial discipline, Orora has been able to convert the growth in earnings into increased cash flow and improved returns, further strengthening the balance sheet and creating a strong platform from which to invest for future growth,” said Orora’s Managing Director & CEO, Nigel Garrard.
Orora also revealed that it has agreed to acquire The Garvey Group and Graphic Tech businesses for approximately A$71 million as part of growing its North American Point of Purchase (POP) business.
“Orora continues to invest for future growth, both organically within the core businesses and through bolt-on acquisitions to build regional capability and scale in North America. Since listing three years ago, Orora has announced growth investments of approximately A$380 million,” Mr Garrard continued.
“Today’s acquisitions of The Garvey Group and Graphic Tech businesses for US$54.0 million complement the January 2017 acquisition of The Register Print Group (US$44.0 million) and are further examples of Orora’s growth investment strategy.”
In Australia, the A$42.0 million investment to increase the manufacturing output of the Gawler glass furnaces is on target for completion by March 2017 and the A$20.0 million state-of-the-art dairy sack line at Keon Park (Victoria) commenced production during the period.
Commenting on the results, Mr Garrard said the company was well positioned to finish the year on a high note.
“Orora expects to continue to drive organic growth and to invest in both innovation and growth opportunities during the remainder of FY17, with earnings expected to be higher than reported in FY16, subject to global economic conditions,” Mr Garrard said.
The company has declared an interim dividend of 5.0 cents per share, partially franked to 30%, which is an increase of 11.1% over the prior year. This represents a pay-out ratio of approximately 65% of NPAT, which is within the indicated range.