Orora profit surges, will install EFI Nozomi

Packaging newcomer Orora saw its profit surge on increased revenue in its half year results, and revealed it would be the first Australian company to take the new EFI Nozomi large format digital carton press.

The company’s net profit after tax increased 14.8 per cent from the pcp, reaching $105.7m for the HY. Sales revenue increased by 6.2 per cent to just off $2.1bn, while EBIT is up 10.5 per cent to $165.3m.

Statutory net profit after tax for the HY is $103.8m, which including significant item expense after tax of $1.9m from net profit on the sale of Fibre Packaging’s Smithfield site, offset by costs related to the restructure of Fibre Packaging in NSW, including the closure of the Smithfield site and potential additional decommission costs associated with the Petrie Mill site.

Orora will be installing an EFI Nozomi press into its Oakleigh, Victoria Fibre Packaging site, and a similar machine going into its US operation, it will be the fifth company to do so worldwide. The single-pass corrugated digital packaging printer opens up personalisation possibilities, while maintaining high production speeds.

Nigel Garrard, managing director, CEO, Orora says, “We released the Orora Global innovation initiative in 2015, earmarking $45m to be invested, that has now been fully committed, and we are increasing that by $30m to a total of $75m allowing us to invest in innovating customer led solutions

“The EFI Nozomi machines are large format digital printers which gives us bigger sheet size, but almost the same speeds as other equipment.

“We have trialled digital over the past couple of years, and the two that we are buying are the fifth and sixth machines released in the world. We see an exciting opportunity to look at these with our customers.

“We will have an innovation forum in May where we show customers our investment and give an update on what is happening in the business. The Nozomi will arrive in April or May.

“I think there are strong opportunities with digital, we have also invested in a laser cutter, and committed to the next generation of that which will operate at a higher speed.”

Frank Mallozzi, senior vice president, Sales and Marketing, EFI, says, "Orora Packaging is an excellent example of a large, multinational business that takes a savvy, proactive approach to enhanced customer service and best-in-class production for the corrugated packaging space. We are excited to partner with Orora to help the company grow its competitive edge with the Nozomi presses.”

Garrard acknowledged the effect fluctuating and increasing energy costs have had on the business, and says the company has signed a contract with wind energy company Pacific Hydro, to build a new wind farm.

He says, “Like many businesses we have been absorbing rising energy costs for some years. We have been vocal in our advocacy for energy reform, and will continue.

“Behind the scenes we have been optimising our use. We have been focusing on energy intensity, with short term and medium term goals, with capital behind them. We are well on our way to achieving the first target of 10 per cent reduction in energy intensity.

“We have been looking at a competitive, reliable source of energy for the years to come ahead. We have come to an agreement to provide wind energy for South Australia, through Pacific Hydro.”

The long-term power purchasing agreement will insulate the company from South Australia’s energy market volatility, as the most fluctuating market in the country.

Gerrard says, “It will have an important role to play among gas coal and hydro due its greater price certainty over the years to come.

“If the wind does not blow we go back into the grid, equally if it generates more than we need on a windy day we put the surplus back into the grid.

“The problem with renewables like wind is that it is not a sole solution. Plants like ours need the same amount of power every hour of every day of the year.”

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