Orora Limited · ASX:ORA
Orora — Investor Day (April 2022)
95 slides from Orora's investor day presentation, Apr 28, 2022
Slide 1: Orora Limited (ORA) – Investor Day
28 April 2022 ASX Market Announcements Office Australian Securities Exchange 20 Bridge Street Sydney NSW 2000 Orora Limited (ORA) – Investor Day The following document is attached: • Orora Investor Day Presentation 28 April 2022 Yours faithfully Ann Stubbings Company Secretary This announcement has
Slide 2: Investor Day 28-29 April 2022
Investor Day 28 - 29 April 2022
Slide 3: Important information
Important information The information in this presentation is intended to be general background information on Orora Ltd (Orora) and its subsidiaries (Orora Group) and its activities. The information is supplied in summary form and is therefore not necessarily complete, and to the extent permitted b
Slide 4: Welcome
Welcome Alister Crow General Manager, Treasury & Investor Relations 3
Slide 5: Agenda
Agenda 01 Group overview and investment proposition 04 Orora Beverage Brian Lowe Simon Bromell 02 Shareholder value blueprint 05 Orora’s approach to Sustainability Shaun Hughes Ann Stubbings 03 Orora Packaging Solutions and Orora Visual 06 Concluding remarks Frank Pennisi and Brian Lowe Brian Lowe 4
Slide 6: Today's presenters
Today’s presenters Brian Lowe Shaun Hughes Frank Pennisi Simon Bromell Ann Stubbings Matt Wilson Managing Director & Chief Financial Officer President, Orora Group General Manager, Chief People, Sustainability Chief Strategy & Corporate Chief Executive Officer Packaging Solutions Beverage & Governan
Slide 7: Group Overview and Investment Proposition
Group Overview and Investment Proposition Brian Lowe Managing Director & Chief Executive Officer 6
Slide 8: Orora at a glance
Orora at a glance Orora Beverage We are manufacturers and distributors of tailored packaging, products and visual Orora communication solutions to Packaging Solutions customers all around the world NORTH AMERICA AUSTRALASIA Orora Visual Orora’s ambition is to be a leading sustainable packaging solut
Slide 9: One Orora
One Orora Every day, across our businesses, we deliver sustainable and innovative packaging and visual solutions that lead the industry and bring our customers’ brands to life. Purpose To be a leading sustainable packaging solutions company, designing and delivering products and services that enable
Slide 10: Compelling investment proposition
Compelling investment proposition Orora provides investors with a robust and defensive earnings profile core in Australasia with attractive growth upside in North America Leadership Robust and Well invested Long term positions in diversified assets and customer attractive business model defensive tr
Slide 11: Leadership positions in attractive markets
Division Market position Market size1 Market growth1 Glass #2 ~$1.5 billion 2-4% Leadership Cans #1 ~$1 billion 4-6% positions in attractive Closures #2 ~$100 million 2-4% markets Orora Packaging Orora possesses strong Top 10 ~US$50 billion 3-5% Solutions market positions in its core operating divis
Slide 12: Robust and diversified revenue generation
Robust and diversified revenue generation Diversified nature of operations and broad set of customers underpins a growing defensive earnings profile Indicative revenue breakdown by end market1 16% 14% Market growth rate p.a. (%)2 Technology 12% 10% 8% Healthcare 6% • Orora Group, across • The resili
Slide 13: Delivering an attractive growth outlook
Delivering an attractive growth outlook Each business has a clear set of strategic priorities aligned to our strategic pillars. Collectively these position Orora to deliver Shareholders with consistent, above-market, long-term growth Enter new segments – Enhance and Expand – mid‐term targets everyda
Slide 14: Historical Financial Performance
Historical Financial Performance Brian Lowe Managing Director & Chief Executive Officer 13
Slide 15: Long-term performance
Reported earnings per share1 (cps) Total shareholder return2,3 ORA +366% 17.4 18.0 16.9 15.6 13.2 8.6 7.3 11.8 8.6 7.9 6.8 ASX 200 +109% 11.8 8.8 9.4 9.6 7.7 6.4 Long-term FY17 FY18 FY19 FY20 FY21 1H22 performance Half year Full year Fibre Sale & COVID impact FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Slide 16: Overview of sales and earnings
Overview of sales and earnings Robust financial performance with strong earnings recovery in FY21 continuing in FY22 Revenue1 ($m) EBIT1 ($m) Continuing operations Continuing operations 1H21 vs 1H22 3,390 3,566 3,538 262 249 1H21 vs 1H22 +9.6% 223 779 786 834 +10.4% 1,989 1,814 159 150 140 154 443 1
Slide 17: 1H22 Financial Highlights and FY22 Outlook
1H22 Financial Highlights and FY22 Outlook Brian Lowe Managing Director & Chief Executive Officer 16
Slide 18: 1H22 financial highlights and FY22 Outlook
1H22 financial highlights and FY22 Outlook FY22 outlook SALES EARNINGS BEFORE INTEREST UNDERLYING NET PROFIT AND TAX (EBIT) AFTER TAX (NPAT) Positive operating and earnings momentum has continued for the Orora group post 1H22 $1,988.6m $154.5m $102.7m Results, and we are forecasting FY22 EBIT to be
Slide 19: Shareholder Value Blueprint
Shareholder Value Blueprint Shaun Hughes Chief Financial Officer 18
Slide 20: Overview of Orora's shareholder value blueprint
Overview of Orora’s shareholder value blueprint Orora’s TSR performance will be driven by three key components TSR COMPONENT ORGANIC GROWTH RETURNS-FOCUSED INVESTMENT CAPITAL MANAGEMENT STRATEGIC Enhance and Enter new PILLAR Optimise to Grow Disciplined approach to capital allocation Expand segments
Slide 21: Capital allocation framework
Disciplined Approach to Capital Allocation Operating FCF Operating Free Cash Flow Base capital expenditure Core business capital Growth capital expenditure allocation Capital Sustainable dividend: Payout ratio of 60% - 80%, franked to extent possible allocation Excess cash flow Excess cash flow fram
Slide 22: Balanced and disciplined approach to capital allocation
Balanced and disciplined approach to capital allocation Disciplined capital allocation: Capex ($1.0bn), shareholder returns ($2.1bn) and M&A ($0.4bn) Capex Ordinary Operating free cash flow1 dividends2 27% 26% $2.2bn Total deployed1 Shareholder returns $3.8bn 53% / ~$2.1bn Other 6% Fibre sale procee
Slide 23: Group capex profile
Group capex profile To support strong end-market customer demand, Orora will continue to invest in base and growth capex Growth capex ($m) Significant capex projects: Continuing operations Initiative Est. completion date Capital Commitment Cullet beneficiation plant FY22 $25m1 6 6 Dandenong second C
Slide 24: Sustainable dividend
Sustainable dividend Given the company’s cash conversion and profit generation, dividends have grown consistently Ordinary dividends per share (cps) 14.0 13.0 • With consistent cashflow and a strong balance 12.5 12.0 sheet, Orora is able to balance capital needs in 11.0 the business whilst providing
Slide 25: Committed to investment grade credit profile
Committed to investment grade credit profile Orora has strong cash conversion and flexibility to fund capital initiatives as well as future M&A Group net debt and leverage ($m) Debt maturity profile ($m) 1.9x 1.6x 1.6x 1.5x 1.5x 138 0.9x 350 890 674 660 207 197 453 512 292 35 FY17 FY18 FY19 FY20 FY2
Slide 26: Concluding remarks
Concluding remarks • Orora’s approach to capital allocation remains focused on an appropriate balance between capital deployment and cash returns to shareholders • Orora has a strong track record of deploying capital into the business, whilst also rewarding shareholders with strong cash returns • Ca
Slide 27: Q&A with Brian Lowe and Shaun Hughes
Q&A with Brian Lowe and Shaun Hughes 26
Slide 28: Orora Packaging Solutions (OPS)
Change image Orora Packaging Solutions (OPS) Frank Pennisi President, Orora Packaging Solutions 27
Slide 29: Orora Packaging Solutions business overview
Orora Packaging Solutions business overview Our customers’ Opportunities to Who we are Market growth Positioned for growth packaging department deploy capital • A leading vertically- • OPS plays a critical role • US packaging • Focus on business • Targeted, returns- integrated provider of in custome
Slide 30: Investment proposition
Investment proposition Leading vertically Large and growing integrated packaging addressable market provider Strategic Essential part Scalable, capital of our differentiated deployment customers business model supply chain 29
Slide 31: OPS business model
OPS Aesthetic business Testing design model Quality assurance Structural design Equipment & Corrugate automation manufacturing Orora Packaging Solutions Printing & Warehousing converting Fulfilment Sourcing & kitting Pack Managing materials suppliers 30
Slide 32: Solving customers' packaging challenges
Solving customers' packaging challenges Customer challenges Packaging Solutions OPS plays an important • Numerous suppliers • Consultative approach, experienced sales force role in our customers’ • Access to the right suppliers • One stop shop for customers packaging supply chains by • Working capit
Slide 33: Capabilities
Operations snapshot A vertically-integrated packaging solutions provider delivering essential products and services to diverse and defensive end-markets primarily across North America and Mexico Manufacturing Distribution Engineering and Design Fulfillment Testing • Corrugated packaging • Customer c
Slide 34: Locations
Locations 1 Canada OPS has broad reach and WA 1 ME a presence in most key MT ND VT markets in North America OR 1 MN NH ID and an attractive position SD WI MI NY MA CT RI WY in Mexico 1 PA IA NE IL IN OH NJ 2 NV 1 MD 1 1 1 1 DE UT 1 WV CA CO VA KS MO KY 8 13 1 NC 1 TN 2 AZ 3 OK NM AR SC GA MS AL 3 TX
Slide 35: Industry perspectives
Industry US packaging consumption1 % packaging sales through distributors2 perspectives Fibre-based US$67 billion ~15% Distributors represent ~20% (US$40 billion) of Flexible packaging US$41 billion ~25-30% the ~US$200 billion overall packaging market Rigid plastic US$41 billion ~15% Metal US$30 bil
Slide 36: Competitive landscape
Competitive landscape OPS wins against different companies depending on product, region, and customer type OPS competitors: • Undifferentiated offerings going direct • Substrate focused distributors • National, regional and local packaging distributors • Digital retailers • Big integrated manufactur
Slide 37: How and why does OPS win?
How and why does OPS win? OPS’ breadth of capability and ability to service, allows us to compete for customers of all sizes Small Large Global Financial Product Custom orders orders scale strength breadth capabilities Small independent Digital Big integrated How OPS wins 36
Slide 38: Custom packaging design
What we do Products & services Markets served Custom • Wide range of recyclable, corrugated products • Ecommerce packaging • Substrates & materials: » Printed boxes » Flexibles • Retail • Healthcare design » Displays and POPs » Cushioning and inserts » Rigid packaging » Printed tape and labels • Tec
Slide 39: Tailored packaging
What we do Re-design of a complex box and foam set to a more sustainable package for an expensive and delicate baby crib Tailored packaging Packaging engineers work with a wide variety of substrates and recommend the optimal solution Orora Landsberg’s design centres are an invaluable partner. They h
Slide 40: Sustainability
What we do From an EPS foam cooler to paper and cornstarch-based insulated pads with MPP printed corrugated boxes Sustainability OPS creates packaging solutions that reduce the impact on the environment Fully curbside Equivalent product Diverting from CO2 emission recyclable protection landfill redu
Slide 41: Manufacturing
What we do From foam inserts to a completely corrugated solution printed on the Nozomi digital printer Manufacturing High-grade, recyclable boards and liners improve product protection and product marketability Orora Landsberg has demonstrated a commitment to the ongoing business relationship and co
Slide 42: Fulfillment
What we do Fulfillment OPS manages B2B, B2C, and direct-to-consumer fulfillment of any product 41
Slide 43: Testing
What we do Testing OPS creates, tests and analyses packaging to ensure it adheres to industry regulations and arrives safely Data driven metrics provided are exactly what we are looking for 42
Slide 44: Strategic roadmap
Strategic roadmap Now entering the second phase of the strategic journey, OPS is positioned for sustainable growth FY23 - FY22 - 23 FY21 - 22 Expand Enhance Optimise • Active M&A program • Execute digital transformation • Expand engineering, design, and (e-Commerce roll-out, omnichannel service capa
Slide 45: Approach to customer account profitability
Optimise Approach to customer account profitability Systematic guardrails Price management Profitability Tailored strategies 44
Slide 46: Integration and M&A strategy
Optimise Integration and M&A strategy Integration progress M&A strategy • Orora Fresh Mexico and Bronco Packaging • Methodical approach transitioned to SAP with zero downtime • Application of the learnings and key and no customer impact takeaways from reviews of past acquisitions • Continued progres
Slide 47: OPS EBIT margins
Optimise OPS EBIT margins Positive EBIT margin momentum has continued into FY22 Business improvement Stable performance SAP implementation COVID initiatives 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FY15 FY16 FY17 FY18 FY19 FY20 FY21 1H22 46
Slide 48: Digital transformation roadmap
Enhance Digital transformation roadmap Phase 1 Phase 2 Phase 3 Phase 4 FY21-FY22 FY23 FY23-FY24 FY25 Build foundation Drive growth Expand & scale Optimise & upgrade Set up new Personalisation and Online enhancements Enhance experiences and build technology foundation target marketing and expand awar
Slide 49: Digital Journey Mapping
Targeted Awareness Consideration Purchase Comparison Read Benefit Downloads search reviews comparison eBook Enhance 3rd party Downloads Industry whitepaper Web visit trends Digital Web Journey Procurement Email Receives email Mapping from BDR Social Listen to podcast Display Systematic approach Ad c
Slide 50: Future capital deployment opportunities
Enhance and expand Future capital deployment opportunities Capital deployment is a key part of OPS’ growth strategy Paper and corrugated Capability extension M&A adjacencies • Digital printing • Expansion of corrugate • Custom focused capacity in favourable • Automation markets • Medium and short ru
Slide 51: Concluding remarks
Concluding remarks • We are a leading vertically-integrated provider of packaging solutions focused on custom design, small and medium runs, and enhanced sustainability • OPS plays a critical role in customers’ supply chains, through our focus on value-adding products, services and differentiated bu
Slide 52: Orora Visual – Business Overview and Strategic Roadmap
Orora Visual – Business Overview and Strategic Roadmap Brian Lowe Managing Director & Chief Executive Officer 51
Slide 53: Orora Visual business overview
Orora Visual business overview Products and services Visual & product • In-store displays: End-caps, floor units, fabric/canvas, counter displays marketing • Promotional signage: Sales posters, graphic wall out-fittings, decals Consumer • Retail-ready and consumer packaging: High resolution graphic
Slide 54: Orora Visual strategic roadmap
Longer-term Medium-term (FY25+) Near-term (FY23-25) Expand (FY22-23) Enhance Capability extension Orora Visual Optimise to grow Build a scalable platform Realise full entitlement of business • Expand capabilities in core strategic • Business process optimisation • Broaden customer base and reach in
Slide 55: Q&A – OPS and OV
Q&A – OPS and OV Frank Pennisi and Brian Lowe 54
Slide 56: Orora Beverage
Infinitely recyclable beverage packaging Orora Beverage Simon Bromell Group General Manager, Beverage 55
Slide 57: Beverage overview
Beverage Orora Beverage provides market-leading sustainable packaging solutions for the beverage industry overview Infinitely recyclable beverage packaging Aluminium cans Glass bottles Closures and caps Complete can range of Comprehensive range Screw cap closures with a Eight manufacturing sites cla
Slide 58: Investment proposition
Investment proposition Market leader Strong and Attractive in ANZ longstanding growth beverage customer prospects packaging relationships Privileged Highly Compelling asset position experienced, value capable team proposition 57
Slide 59: Why do customers choose Orora Beverage?
Why do customers choose Orora Beverage? Value creating packaging Reputation for reliability Advantaged in Efficient highly solutions and quality of supply sustainability capable operators • Multi-substrate beverage • Investments in supply chain • Manufacturer of infinitely • Defined Advanced capabil
Slide 60: Value creating packaging solutions
Cans Glass Closures • Extensive can design and • Proprietary bottles designs • Leading range of colour and Value decoration expertise • Digital printer/proofer enables across » Wine design solutions » Two colour emboss creating fast development » Beer » Olive Oil » Hybrid emboss » 3D emboss • Expand
Slide 61: Value creating packaging solutions
• New eCommerce capability extends reach and improves service to a growing high value SME customer group • A customer-focused solution that increases the ease of doing business with Orora • Customers can self serve on the platform, access their decoration artwork, view product information and pricin
Slide 62: Reputation for reliability and quality of supply
Reputation for reliability and quality of supply • Significant investments and capability in • Strong reputation and brand name • Consistently maintained Deliveries in Full supply chain planning and distribution recognition within B2B environment Time On Time (DIFOT) metric at 99%+ over the last fiv
Slide 63: Focused sustainability activity
Focused sustainability activity • Infinitely recyclable products and • Renewable energy agreements and solar • Protecting safety, health and human rights substrates • Focused initiatives to address Orora • Championing diversity, equity and inclusion • Initiatives to increase recycled content Eco Tar
Slide 64: Efficient and highly capable
Well-invested business Cumulative Capex ($m) • Orora continues to invest in the Beverage business to support long term growth, with $367 million total capital investment since demerger 338 367 307 • Avg Capex/D&A over this period 217 has been 117% Efficient 171 128 58 82 26 • Strong RoAFE maintained
Slide 65: Cans
Orora Beverage Cans 64
Slide 66: Cans overview
Cans Key markets • Carbonated soft drink Capabilities and technologies • Diverse range of metal packaging formats for overview • Beer beverages including classic, slims and sleek cans • Leading decoration capability (Decoration Centre • Seltzers and RTD’s of Excellence) • Energy drinks • Specialised
Slide 67: We are experiencing strong growth in cans
We are experiencing strong growth in cans Orora Can sales volumes • Strong volume growth across all segments: ~5% CAGR » Sustainability tailwinds and consumer preference supporting growth in carbonated soft drinks » Growth in beer, driven by craft trends » Rapid growth in flavoured alcoholic beverag
Slide 68: We are investing to drive growth
We are investing to drive growth Investing in capacity expansion, asset upgrades and innovation to meet expected demand $195m 20% On two new Can lines 40% increase in and Ends capacity increase in Cans capacity Cans End capacity • Capital program backed by secured long term contracts with major • Up
Slide 69: Leading in sustainability
Leading in sustainability Aluminium is infinitely recyclable Our Eco Targets drive We use aluminium Cans priorities reductions in CO2, waste coils with ~60% to landfill and water use recycled content • Further light-weighting of can bodies and ends • Maximising recycled content of aluminium coils an
Slide 70: Glass
Orora Beverage Glass SL |
Slide 71: Glass overview
Glass Key markets • Wine Capabilities and technologies • Scale plant – Three furnaces, six forming lines overview • Beer • Diverse range of industry bottle shapes and colours • Flavoured alcoholic beverages - RTDs • Proprietary and light weight bottles • CSD and Non alcoholic beverages • Sleeving de
Slide 72: Strong response to win new business following China impact
Strong response to win new business Spirits Olive oil following • Capitalising on strong growth in the boutique spirits market • Strategy to capitalise on strong domestic olive oil industry China • Range includes a new proprietary glass colour developed by Orora – Orora Crystal™ • Orora is now suppl
Slide 73: Strong track record of investment
Strong track record of investment FY23 and FY17 FY18 FY19 FY20 FY21 FY22 beyond Warehouse 3 and 4 Glass capacity Line 24,35 and 36 Cullet beneficiation G3 Rebuild with G1 furnace rebuild acquisition and G2 furnace rebuild expansion Cooling Fan VSDs plant oxyfuel technology integration G1 Narrow Neck
Slide 74: Leading in sustainability
Leading in sustainability Glass is infinitely recyclable Cullet use saves We recycle ~80% of South Glass priorities on virgin materials Australian CDS glass • Increase cullet use through interstate sourcing • Construction of new Glass beneficiation plant Closed-loop recycling Wind farms supply 80% •
Slide 75: New technology investment in G3 furnace
New technology investment in G3 furnace to deliver significant sustainability benefit Step change reduction in fossil fuel use • The G3 furnace rebuild in 2024 is expected to employ oxyfuel technology, an Australian first for glass furnaces • Investment into a new oxygen plant at Gawler was recently
Slide 76: Closures
Orora Beverage Closures 75
Slide 77: Closures overview
Closures Key markets • Wine Capabilities and technologies • Full service solution (Closures and Capping overview • Beer technical expertise) • Full range of wine closures in multiple sizes • Leading design and decoration capabilities, including digital printing Market share – wine closures (AUS and
Slide 78: Investing in new capabilities
Investing in new capabilities Orora Closures will grow through considered investment in new capabilities Win market share Extend products and services • Utilise eCommerce platform and • Invest in capacity and capability digital marketing to extend reach upgrades to supply premium higher and enhance
Slide 79: Leading in sustainability
Leading in sustainability Aluminium is infinitely recyclable Closures priorities Our Eco Targets drive Collaborating with reductions in CO2, waste supplier partners to drive • Light-weighting of aluminium to landfill and water use recycled content higher • PVC free sustainable liners • Explore eco-b
Slide 80: Beverage Group Strategic Summary
Beverage Group Strategic Summary 79
Slide 81: Beverage Group strategic summary
Beverage Group Optimise to grow Enhance and expand Enter new segments strategic • Continue roll-out of • Complete Can capacity • Extend proprietary glass summary Advanced Manufacturing capabilities expansion in Ballarat, Dandenong and Revesby spirits bottle capability • Expand olive oil and premium
Slide 82: Concluding remarks
Concluding remarks • Orora Beverage is a market leader with a strong reputation for supply reliability, quality, and value-creating packaging solutions • Strong customer focus with a long track record of securing contract renewals, with a significant proportion of base volume secured over the long-t
Slide 83: Q&A - Beverage
Q&A - Beverage Simon Bromell and Brian Lowe 82
Slide 84: Orora's Approach to Sustainability
Orora’s Approach to Sustainability Ann Stubbings Chief People, Sustainability & Governance Officer 83
Slide 85: Sustainability – always a part of Orora's DNA
Sustainability – always a part of Orora’s DNA Orora has had a Sustainability program since inception, the original program focused on these material areas, but was updated, expanded and refreshed during FY21 to ‘Our Promise to the Future’ 2013 – 2021 2021 – 84
Slide 86: A new chapter in sustainability
A new chapter in sustainability 85
Slide 87: Our commitment to addressing climate change
Our commitment to addressing climate change • Orora is committed to achieving net zero greenhouse gas emissions by 2050 for Scope 1 & 2 • Orora is committed to achieving an interim goal of 40% reduction in greenhouse gas emissions by 2035 for Scope 1 & 2 from FY19. Our well defined plan to achieve t
Slide 88: We're a proven leader in the Circular Economy
We’re a proven leader in the Circular Economy This target is in excess of the 2025 50% recycled content target for glass packaging supported by the Australian Packaging Covenant Organisation *pre and post-consumer 87
Slide 89: We're working to enrich our communities
We’re working to enrich our communities We’re focused on initiatives that benefit our Modern Slavery Statement teams and our communities through: Supplier Assurance Framework • Protecting safety, health and human rights DEI Council North America • Championing diversity, equity and inclusion Safety M
Slide 90: Orora safety performance update
Orora safety Lost time injury frequency rate (LTIFR)* Recordable case frequency rate (RCFR)^ performance 6.8 update 2.0 1.9 6.5 June 2021# December 2021 June 2021# December 2021 LTIFR* = (Number of lost time injuries / Total number of hours worked for employees and contractors) x 1,000,000 RCFR^ = (
Slide 91: Our progress on Sustainability
Our progress on Sustainability We are making good progress with our sustainability goals and commitments 60% recycled content* Net zero emissions by 2050 Prioritising action for our for Glass beverage containers by 2025 40% reduction in emissions by 2035 people and our community • Orora’s use of rec
Slide 92: Q&A with Executive Leadership Team
Q&A with Executive Leadership Team 91
Slide 93: Compelling Investment Proposition and Closing
Compelling Investment Proposition and Closing Brian Lowe Managing Director & Chief Executive Officer 92
Slide 94: Compelling investment proposition
Compelling investment proposition Orora provides investors with a robust and defensive earnings profile core in Australasia with attractive growth upside in North America Leadership Robust and Well invested Long term positions in diversified assets and customer attractive business model defensive tr
Slide 95: Investor Relations Contact
Investor Relations Contact Alister Crow General Manager, Treasury & Investor Relations alister.crow@ororagroup.com