Orora (ORA) - Tariff risks

Orora designs, manufactures, and supplies glass bottles and aluminium cans for the beverage industry. Its France-based Saverglass business supplies high-end luxury glass bottles to premium wine and spirits brands around the globe, while its Gawler plant in South Australia caters to the broader commercial wine and beer industry. The company’s cans and related products are manufactured at various factories across Australia and New Zealand. Orora was spun off from Amcor in 2013 and is headquartered in Hawthorn, Australia.

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Orora hosted an investor day in Melbourne where the can and glass container manufacturer, in effect, downgraded its guidance for second-half FY25 earnings before interest and tax, citing weaker demand in its Saverglass division. The company also highlighted its outlook was subject to no material impact from persistent US tariff risks. The company has made changes to its sourcing pathways to ameliorate the impact of the US tariffs, and imposed surcharges, although the bigger picture of how higher prices affect demand for the wine and spirits contained in Orora’s products remains uncertain. Post the investor day, Ord Minnett has cut its EPS estimates by 5.6%, 6.8% and 3.2% for FY25, FY26 and FY27, respectively.

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This leads us to reduce our target price to $2.30 from $2.40. We maintain our Hold recommendation on Orora given the uncertainty over demand, highlighted by a volatile order book at Saverglass, as the world wrestles with the implications of US trade policies.

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