Orora’s Furnace Closures and Tariff Risks Cloud Glass Segment Outlook
Orora reported a solid FY25 with EBIT up 9.5% and NPAT rising 18%, driven by full-year Saverglass contribution and robust cans volume growth. The company completed its portfolio transformation by divesting OPS and is investing heavily in cans capacity amid a challenging global environment.
- EBIT increased 9.5% to $262.1 million
- NPAT rose 18.0% to $151.1 million
- Completed divestment of OPS, reducing net debt and leverage
- Operating cash flow surged 46.4% to $333.6 million
- Cans capacity expanded with new lines at Revesby and Rocklea
Solid Financial Performance Amid Global Challenges
Orora has delivered a commendable FY25 result, navigating a complex global operating environment marked by tariff uncertainties and shifting consumer demand. The company’s earnings before interest and tax (EBIT) rose by 9.5% to $262.1 million, while net profit after tax (NPAT) increased 18.0% to $151.1 million. This growth was underpinned by the full-year contribution from its premium glass business Saverglass, acquired in September 2023, and strong volume growth in its aluminium cans segment.
Portfolio Transformation and Capital Management
FY25 marked the completion of Orora’s strategic portfolio transformation with the divestment of its OPS business for $1.8 billion in December 2024. This move has sharpened Orora’s focus on beverage packaging, particularly cans and premium glass. The proceeds from the sale were used to reduce net debt to $254.2 million, lowering leverage to a conservative 0.7 times EBITDA. The company also initiated an on-market share buyback, repurchasing 4.6% of shares, signaling confidence in its capital position and commitment to shareholder returns.
Investing in Cans Capacity to Meet Growing Demand
Orora’s cans business remains a growth engine, with revenue up 12.1% driven by 6% volume growth and higher aluminium prices. The company completed a second can line at its Revesby site, adding 10% capacity, and is progressing a new line at Rocklea, expected to be operational in FY26. These expansions align with customer investments in filling capacity, particularly in Queensland, positioning Orora to meet sustained demand through to 2030.
Optimising Glass Operations Amid Market Headwinds
The glass segment faced headwinds, with Saverglass EBIT down 5.5% on a pro-forma basis due to global de-stocking and a mix shift towards lower-priced bottles. Orora is responding with network optimisation, including the closure of furnaces at Gawler in Australia and Le Havre in France, and consolidating European production at its Ghlin site in Belgium. The G3 furnace rebuild at Gawler was completed with better-than-expected emissions improvements, supporting the company’s sustainability agenda.
Sustainability and Outlook
Orora advanced its sustainability targets in FY25, achieving significant reductions in greenhouse gas emissions and increasing recycled content in its products. The company aims for 68% recycled content in colour glass by FY35 and 80% in aluminium cans by FY30. Looking ahead to FY26, Orora expects higher EBIT from its cans business, stable earnings from Saverglass, and improved performance at Gawler despite furnace closures. The outlook remains cautiously optimistic, with ongoing capital investment and vigilance over global economic and tariff developments.
Bottom Line?
Orora’s strategic focus and disciplined capital management set the stage for measured growth, but furnace closures and global uncertainties warrant close investor attention.
Questions in the middle?
- How will Orora manage cost pressures and tariff risks in FY26?
- What impact will furnace closures have on long-term glass production capacity and margins?
- Can the cans segment sustain its volume growth amid evolving consumer trends?
