Morningstar | Acquisitions Paper Over Weak North American Volumes for Orora
Orora has materially improved margins and profitability in recent years with efficiencies found in corrugated board conversion via plant rationalisation and targeted capital expenditure to modernise remaining conversion capacity. But Orora’s shares are expensive, trading at 17.3 times diluted fiscal 2019 EPS, particularly given the structural headwinds facing the Australasian segment with low volume growth in corrugated box--forecast at 1.2% annually over the coming decade--and flat to negative volumes expected in the beverage packaging businesses. The market is overly optimistic about the effect that bolt-on acquisitions will have on growth and returns in the North American distribution business.Orora is engaged in providing a range of packaging solutions. Co.'s operating segments include: Orora Australasia, which focuses on the manufacture of fibre and beverage packaging products within Australia and New Zealand, and its manufactured products include glass bottles, beverage cans, wines closures, corrugated boxes, cartons and sacks, and recycled paper; and Orora North America, which primarily located in North America, is engaged in purchasing, warehousing, selling and delivering a range of packaging and other related materials, and its business also includes integrated corrugated sheet and box manufacturing and equipment sales capabilities.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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