A strong first half result from Orora, with earnings of $155m representing 10% growth and a 13% beat to UBS forecasts. North America delivered 31% constant earnings growth and improved margins to 4.6%, employing price increases to offset cost inflation.
A -2% earnings decline for Australasia beverage was a 10% beat on the broker’s forecast, and a strong result given lost Chinese wine volumes. Expect a return to earnings growth in the second half.
The company retains $400m in surplus capacity to support growth, and continues to explore merger and acquisition opportunities around the Australia New Zealand beverage packaging business and the North American packaging distribution platform.
The Neutral rating is retained and the target price increases to $3.80 from $3.65.
Sector: Materials.
Target price is $3.80.Current Price is $3.56. Difference: $0.24 – (brackets indicate current price is over target). If ORA meets the UBS target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
