What: Newly formed packaging company, Orora Ltd (ASX: ORA) today announced a strong set of FY14 pro forma results, sending its share price up 8% in morning trade. Orora, which was formed in late 2013 following a demerger from Amcor Limited (ASX: AMC), also announced a three cent final dividend, taking the full-year payout to six cents per share and putting the stock on a trailing dividend yield of 3.7%.
So what: Given the company has not gone a full year on the ASX, the company's report included pro forma results. However, the results today were enough to whip investors into a buying frenzy. Here are some reasons why investors could be buying up the stock:
- NPAT before significant items was $104.4 million, up 44.8% on pro forma FY13
- Sales revenue was up 7.9% to $3.2 billion
- FY14 EBIT was up 29.6% to $192.1 million
- The dividend payout ratio was approximately 70%
- Net debt dropped $60 million to $636 million
- Return on average funds employed was 9.3%, up from 7.2%
- Northern American EBIT was up 31.3% to $57.1 million
- Australasia EBIT was up 25.7% to $162.5 million
- Operating cash flow was up 31.7% to $224.1 million
Now what: Orora's products continue to be in high demand across both Australasia and North America and with cost initiatives in place, management believe profit will be higher again in FY15. Given today's result Orora shares trade on a price-earnings ratio of around 18.3 and dividend yield of 3.7%, which means it's not a bargain at current prices. However given the company's growth prospects in the long term, it doesn't appear too demanding either.
