Slide 1: Orora Limited ABN 55 004 275 165
Orora Limited ABN 55 004 275 165 Authorised for release to the ASX by Orora’s Company Secretary, Ann Stubbings
Slide 2: Important information
Important information Forward Looking Statements This presentation contains forward looking statements that involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to Orora. Forward look
Slide 3: FY20 financial highlights – continuing operations
FY20 financial highlights – continuing operations UNDERLYING EARNINGS BEFORE SALES REVENUE INTEREST AND TAX (EBIT) • Resilient despite COVID-19 • North American financial $3,566.2M $224.3M performance recently stabilised 5.2% INCREASE 14.3% DECREASE • $600.0M capital return completed • Full year div
Slide 4: Sale of Australasian Fibre business complete
Sale of Australasian Fibre business complete Orora completed the sale of its Australasian Fibre business for an enterprise value of A$1,720 million to Nippon Paper Industries Co., Limited on 30 April 2020. • Completion of the Fibre Australasia sale was a significant milestone for Orora $1,720 M Ente
Slide 5: Delivering further value with on-market buyback
Delivering further value with on-market buyback Orora is pleased to announce an on-market buyback of up to ten percent of its issued share capital • The buyback represents ~96.5 million shares, with a current market value of ~$230 million, based on Orora’s closing share price on 19 August 2020. • Re
Slide 6: COVID-19 Response Framework and Principles
COVID-19 Response Framework and Principles 1. Health, 2. Customers 3. Active Safety & and Supply Financial Wellbeing Chain Management • Adherence to government and health • Strong emphasis on clear customer • Realignment of operating costs and authority advice and supplier communication increased fo
Slide 7: Comprehensive COVID-19 response
Comprehensive COVID-19 response • Immediate separation of production and non-production workforces globally Supported and engaged • Site based teams quickly developed and adopted pandemic safety procedures and protocols and undertook pandemic simulations in workforce accordance with Business Continu
Slide 8: Orora safety performance improving
Orora safety performance improving Continuing Operations Update on our approach to improving safety • Post completion of a global safety review, Orora commenced a three- June 2019 June 2020 year program to continue to improve health, safety and wellbeing across the business. The program is initially
Slide 9: Financial Results – FY2020
Financial Results – FY2020
Slide 10: FY20 Australasian financial highlights
FY20 Australasian financial highlights • The Beverage businesses are classified as essential services and SALES REVENUE UNDERLYING EBIT have continued to operate throughout COVID-19 related lockdowns in Australia and New Zealand. $785.9M $147.2M • Underlying sales increased 2.9% after taking into ac
Slide 11: Australasia EBIT bridge
Australasia EBIT bridge 7.4% EBIT decline (8.1% decline excluding AASB16) 4.8 8.0 6.7 1.1 3.0 159.0 147.2 (A$’M) FY19 Organic Growth G2 Rebuild Cost Headwinds COVID-19 Impact AASB16 Leases FY20 Impact Orora Ltd “ Organic growth was offset by cost headwinds largely associated with the G2 rebuild and
Slide 12: FY20 North American financial highlights
FY20 North American financial highlights North American Group USD SALES REVENUE USD EBIT • Both OPS and OV are classified as essential services. $1,866.4M $51.8M • Lower local currency earnings in tough market conditions, further impacted by effects of COVID-19. • The financial performance of the bu
Slide 13: North American EBIT bridge
North American EBIT bridge (25.0%) EBIT contraction 105.0 (29.6%) in constant currency 95.0 22.4 85.0 75.0 4.9 65.0 26.6 102.8 18.4 55.0 77.1 45.0 35.0 (A$’M) 25.0 FY19 Impacts of COVID-19 Net Contraction AASB16 Leases Impact FX FY20 (42.9%) contraction excluding AASB16 “ ” (46.4%) in constant Local
Slide 14: OPS — From Concept to Consumer
OPS — From Concept to Consumer OPS is an integrated packaging solutions and corrugated manufacturer serving customers in the food & beverage, healthcare & pharmaceutical, technology, automotive, retail, industrial manufacturing and warehousing & shipping industries OPS is a total packaging solutions
Slide 15: OPS underlying gross margins are improving
OPS underlying(1) gross margins are improving 6.0% 26.0% • OPS gross margins steadily improved in 2H20, returning to 1H19 levels. 25.5% 5.0% • Underlying EBIT margins in FY20 were in-line with 25.0% 2H19, however 2H20 declined after gains in 1H20, 4.0% 24.5% due to reduced volumes. EBIT Margin Gross
Slide 16: Orora Corporate
Orora Corporate • Corporate costs have been allocated to the continuing business segments with prior year’s figures being restated for comparison. • Ongoing Corporate costs are expected to reduce commensurate with those previously allocated to the Australasian Fibre business. So the expectation is t
Slide 17: Operating cash flow in line with management’s expectation
Operating cash flow in line with management’s expectation in year of transition A$ Million FY19 FY20 Operating cash flow(3) decreased 30.0% to $169.8M • Decrease in cash EBITDA from lower earnings EBITDA 336.9 349.8 • Cash conversion was ~54.0%, down from ~71.0% in the pcp, largely driven by Leases
Slide 18: Strong balance sheet – Orora Group
Strong balance sheet – Orora Group Balance Sheet 1H20 to FY20 Debt Bridge 1,200 996 (1,550) A$ Million June 19 June 20 1,000 800 Funds Employed 1,339 1,403 600 Net Debt (AUD) 400 55 31 292 55 27 Net Debt 890 292 200 678 0 Equity 1,645 1,032 (200) (400) Leverage (x)(1) 1.9x 0.9x (600) (800) RoAFE (%)
Slide 19: Update on Review of Strategy & Perspectives for FY21
Update on Review of Strategy & Perspectives for FY21 Orora Limited ABN 55 004 275 165
Slide 20: Review of Strategy
Review of Strategy • New Head of Strategy commenced in February 2020. • Review of strategy undertaken and focused on: • Critically assessing the industries and markets in which Orora operates and the trends that will influence future performance; • Confirming Orora’s core competencies and points of
Slide 21: Portfolio assessment
Portfolio assessment Strengths Strategies • Market leadership • Maintain, renew and win key contracts • Sustainable products • Invest in new capacity • Leading decoration & design capabilities • Continued focus on optimising manufacturing processes • Reputation for reliable supply of high quality pr
Slide 22: Strategic pillars
Strategic pillars ENABLERS Safety 1 OPTIMISE AND GROW To be a leading Diverse talent sustainable packaging solutions company Customer ENHANCE AND focus 2 EXPAND Delivering on the Operating excellence promise of what's inside Innovation 3 ENTER NEW SEGMENTS Financial discipline Orora Ltd 22
Slide 23: Shareholder value blueprint
Shareholder value blueprint TSR COMPONENT ORGANIC GROWTH RETURNS-FOCUSED INVESTMENT CAPITAL MANAGEMENT STRATEGIC Enhance & Enter new Optimise & Grow Disciplined approach to capital allocation PILLAR Expand segments Capital Potential Australasia Acquisitions Sustainable Sensible North America investm
Slide 24: Sustainability & perspectives for FY21
Sustainability & perspectives for FY21 Orora Limited ABN 55 004 275 165
Slide 25: A leading sustainable packaging solutions company
A leading sustainable packaging solutions company Orora Glass Orora uses more than In North America, OPS achieved Reinforcing the recycles ~80% 63% recycled coil 70% recycled content circular economy of South Australia’s Container in Can manufacturing and all in the manufacture of corrugated Deposit
Slide 26: Orora has launched new Eco Targets
Orora has launched new Eco Targets • New Eco Targets build on success of previous 5-year targets met in FY19. • Aim is for a 5% improvement on each Eco Target ratio for the Production and Distribution businesses across CO2e, Waste to Landfill, and Water Use by 30 June 2024. Graphic new • Measured as
Slide 27: Perspectives for 2021
Perspectives for 2021 Top priorities for FY21 • Input costs: • Continue to respond and support customers and team members with • The remaining net cost impact from energy price increases of respect to the impact of COVID-19; ~$1.5M will impact 1H21. • Continue to implement the improvement programs i
Slide 28: Outlook
Outlook Orora expects the challenging and uncertain market conditions to persist for the foreseeable future. Despite the current COVID-19 pandemic, Orora’s businesses qualify as essential service providers in both Australasia and North America and are therefore able to continue to operate. A number
Slide 29: APPENDIX FY2020
APPENDIX FY2020
Slide 30: Appendix - Significant items
Appendix 1 - Significant items • Total significant items during the year amount to a profit after tax of $71.6M and consist of the following: • Continuing Businesses – A significant item expense after tax of $100.1M. This is comprised of restructuring and impairment charges in North America as a res
Slide 31: Appendix – Like for like earnings
Appendix 2 – Like for like earnings Orora has initially applied AASB 16 Leases using the Financial Summary – Continuing business – FY20 Lease adjusted modified retrospective approach. Under this method, the A$ Million FY19 FY20 Change % comparative information has not been restated. To assist the re
Slide 32: Appendix – Like for like earnings (continued)
Appendix 2 – Like for like earnings (continued) Australasia - Continuing business – Lease adjusted (A$ mil) FY19 FY20 Change % Sales Revenue 778.7 785.9 0.9% EBIT 159.0 146.1 (8.1%) EBIT Margin % 20.4% 18.6% RoAFE 30.3% 27.5% North America (AUD) – Lease adjusted (A$ mil) FY19 FY20 Change % Sales Rev