Morningstar | Restructuring, management focus, and an improved consumer to lift returns in Orora’s packaging business.
Following the demerger from Amcor, Orora has built on its strong number-two positions in fibre and beverage packaging materials in Australia. Restructuring efforts and selective capital investments in new projects have improved Orora’s competitive position and increased profit margins. Nevertheless, returns on invested capital remain capped by strong competition and the bargaining power of large multinational food and beverage customers. With domestic consumption improving and Australian wine exports returning to growth, we expect steady revenue growth and growing free cash flow from Orora’s core business. The North American business is increasingly important as it pursues bolt-on acquisitions in the retail point-of-sale display segment. This provides an outlet to deploy free cash flow, but we are yet to be convinced that Orora has a competitive advantage in this space.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.
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