The share price of Orora Ltd (ASX: ORA) is down 13% in reaction to the FY19 report released this morning.
Orora is a global packaging business which provides a range of packaging solutions and displays. Its products include glass bottles, aluminium cans, closures & caps, recycled paper, point-of-purchase displays, boxes & cartons, rigid packaging, flexible packaging, bags and sacks. The company operates in seven countries with nearly 7,000 employees. It has 47 manufacturing plants and 23 distribution sites.
Orora’s FY19 Profit Doesn’t Impress Investors
Orora reported that its sales revenue increased by 12.1% over the year to $4.76 billion. Revenue was boosted from the acquisitions of Bronco and Pollack, which completed in the first half of FY19. But the company said there was strong revenue growth across most of the Cans market segments.
EBITDA increased by 5.1% to $468.1 million and EBIT grew by 3.7% to $335.2 million (click here to learn what EBITDA and EBIT mean).
Net profit after tax (NPAT) increased by 4% to $217 million and profit/earnings per share (EPS) rose by 3.7% to 18 cents. The company recognised the restructuring and impairment charges after tax of $55.8 million, which the company had already warned about.
Orora decided to also increase the FY19 dividend by per share by 4% to 13 cents per share.
However, the company’s net debt increased by 33% to $890 million, which saw the leverage ratio (net debt / trailing 12 month EBITDA) increased from 1.5x to 1.9x.
At the end of next month Orora’s CEO and Managing Director Nigel Garrard will be retiring, and he will be replaced by Group General Manager of Orora Fibre Packaging Group, Brian Lowe.
Is Orora A Buy?
Orora said that in FY20 to help offset challenging market conditions and cost headwinds it will continue to invest in efficiency, growth and efficiency as well as integrating recent acquisitions.
Investors pushed the sell button on Orora shares today and I can see that the company is facing short term headwinds, which is why I’m not looking interested in buying shares. I’d rather invest in the shares in the free report below instead.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.