The Orora Ltd (ASX: ORA) share price will be one to watch today after the packaging company reported its half-year results to the market.
Here are the key highlights for the six months ended December 31 2016:
- Revenue from continuing operations up 4.1% on the prior corresponding period to $ 1,975.4 million.
- Underlying net profit after tax of $92.1 million, up 12.3% on the first half of FY 2016.
- Earnings per share of 7.7 cents.
- Partially franked interim dividend of 5 cents per share, payable 10 April 2017.
Driving the solid result was the strong performance of both its Australasian and North American businesses.
Earnings before interest and tax from its Australasian businesses increased 3.3% to $109 million during the half, thanks partly to manufacturing and operating efficiencies and a jump in earnings from the beverage side of the business.
But the North American segment was the star performer during the half. Earnings before interest and tax in the segment increased 19.8% to $55.1 million, or 25% in constant currency terms.
Orora Packaging Solutions was a key driver of the result. Not only did the business grow earnings at a solid rate, but margins continued to increase as the company focuses on its value add service model.
A further boost came from the acquisition of the IntegraColor business. Pleasingly the newly-acquired business delivered financial results in line with expectations.
For the remainder of FY 2017 management expects its organic growth to lead to earnings coming in higher than FY 2016, subject to economic conditions.
Is Orora a good investment?
I think Orora is a good long-term investment and would choose it ahead of packaging giant Amcor Limited (ASX: AMC).
Not only are its shares cheaper at 17x trailing earnings, but I believe its long-term growth prospects are stronger.
Today's result may not have been incredible, but I think it was a solid one and emphasised the quality of its overall business.
