Melbourne-based packaging business Orora (the rump of Amcor) will make another buyback of up to 10% at cost of $230 million in the wake of a solid full-year result for 2019-20.
The buyback is the second from the company rewarding shareholders with the $1.55 billion profit from the sale of its Australian Fibre business in April.
The company returned $600 million to shareholders in a $450 million capital return and a $150 million buyback.
Now a second buyback will be run over the next few months.
That helped hold the shares to a small loss of 0.4% to 42.38 with the wider market off 0.77%
Orora reported a 5.2% increase in sales revenue from continuing operations to $3,56 billion with its Australasian operations producing sales of $785.9 million, in line with the prior corresponding period. North American sales revenue was also steady at $US1.86.4 million, but EBIT fell 29.6% to $US51.8 million due to market weakness and margin pressures. The estimated net impact of COVID-19 on North American EBIT was ~$US15 million.
Statutory net profit came in at $239.9 million, up from $161.2 million in the previous year.
But on an underlying basis the company’s net profit from continuing operations fell 22.8% $127.7 million.
It will pay a final dividend of 5.5 cents a share, unfranked, on October 12. That’s down a cent a share from the 6.5 cents paid last year and takes the total to 12 cents a share.
But the company has returned hundreds of millions of dollars to shareholders (including that 37.5 cents a share return earlier in the year so there should not be any quibbling about the cut.
One point to look out for is lower demand for Orora’s Australian wine bottles from the impact of the bushfires on wine production and the growing problems in China which has been a boom market for local vintners.
Looking to 2020-21 the company said it “expects the challenging and uncertain market conditions to persist for the foreseeable future. Despite the current COVID-19 pandemic, Orora’s businesses qualify as essential services providers in both Australasia and North America and are therefore able to continue to operate. A number of improvement initiatives have been successfully implemented across the Orora businesses and pleasingly, North American financial performance has stabilised. A further update will be provided at the AGM in October. ”
The AGM will also see more details of the strategic review that was concluded in the June half which has settled on a number of businesses where Orora will focus its energies and capital.
Directors highlight this in this comment yesterday “The focus is on leveraging the Australasian Beverage capabilities via exploring footprint expansion and complementary products and services. Separately, the medium-term priorities for the North American businesses will be to drive organic improvement initiatives including enhancing digital capabilities and productivity.”
Like its former parent, Amcor, Orora is off to the US in a big way.
