Orora Group (ORA) – The fibre packaging and beverage packaging company has posted a bumper profit with shares rallying almost 10%. NPAT was $186.2m up 14.4% which was a beat on consensus estimates of $180.60m. It was another strong operating result for the full year ended 30 June 2017. Double-digit underlying NPAT, EBIT and EPS growth for the third consecutive year. MD and CEO, Nigel Garrard said “Operationally the business has delivered another strong performance, driven by the strength and resilience of the Group’s core businesses and augmented by investments Orora has made to drive growth, particularly with establishing a national footprint for Orora Visual in the North American point of purchase (POP) and visual communication sector.”
Here is a snapshot of the result:
Both Australasian business groups – Fibre Packaging and Beverage – delivered earnings growth despite flat economic conditions and higher input costs. Orora has however warned that rising energy costs could place pressure going forward. The company declared a final dividend of 6c a share up from 5c. But like many Aussie manufacturers that export overseas, the company faces rising power costs and a rising dollar. One of its electricity supply deals is due to laspe in December. A new contract could reduce profits in the 2018 fiscal year by as much as $8 million. Despite this the company said its outlook is OK. It expects to continue to drive organic growth and invest in innovation and growth in the year ahead, with constant currency earnings expected to be higher than reported in FY17, subject to global economic conditions.
Unconventional View: ORA’s solid result gives us confidence that the company is on the right track and continues to do well. There are concerns that rising electricity prices may hit its bottom line going forward. We think ORA will continue to expand organically and can offset some of these rises and may find new investments to bring costs down. On the chart, the stock looks to have broken out of its pennant flag formation. Investors should see this as a bullish buy indicator. For that reason we think investors should be adding ORA to their portfolio.
Here are the profit results so far: