Orora Limited (ASX:ORA) is entering FY27 with growth in its beverage cans Business offset by continued pressure across glass packaging. For FY26, the packaging group reported Revenue from continuing operations of A$2.226 billion and underlying EBITDA of A$420.3 million, while recognising a non-cash Impairment of A$742.8 million on Saverglass. Cans volumes increased 6.3%, but management expects group EBIT to be lower in FY27 as higher Depreciation and glass-related pressures continue.

Orora operates packaging businesses across beverage cans and glass. Its Cans division supplies beverage packaging in Australia and New Zealand, while its Glass operations include Saverglass and Gawler Glass. Earnings are influenced by packaging volumes, raw material costs, energy prices, utilisation rates and Demand from beverage, wine and spirits customers.

FY26 revenue increased

Revenue from continuing operations increased 6.5% to A$2.226 billion.

Underlying EBITDA was A$420.3 million, up 0.3%.

Underlying EBIT was A$248.2 million.

Underlying net profit after tax was A$142.2 million, down 5.9%.

Underlying Earnings Per Share were 11.4 cents.

The result shows that revenue growth did not translate into a comparable increase in profitability across the group.

The main pressure came from the glass business, while cans delivered higher volumes and earnings.

Saverglass impairment drove significant items

Orora recorded significant items of A$782.2 million in FY26.

The majority related to a non-cash impairment of A$742.8 million on Saverglass.

An impairment reduces the carrying value of an asset when expected future cash flows no longer support its previous accounting value.

Although the charge does not represent an equivalent cash outflow in the period, it reflects a reduction in management's assessment of the economic value associated with the business.

The scale of the impairment means future performance at Saverglass will remain central to whether the revised carrying value can be supported.

Cans revenue rose 13.3%

Cans revenue increased 13.3% to A$880 million.

The division reported EBITDA of A$131.2 million.

EBIT was A$111.4 million, up 7.3%.

Volumes increased 6.3%.

The result indicates that cans remained a more favourable part of Orora's portfolio during FY26.

Demand for beverage cans can be supported by consumer preference for recyclable packaging, product launches and shifts in packaging formats.

However, margins remain sensitive to aluminium, energy and Manufacturing costs.

Rocklea Investment is nearing commissioning

Orora is investing approximately A$140 million in the Rocklea cans facility.

Commissioning is expected at the end of the first quarter of FY27.

The project is intended to expand capacity and support future demand growth.

New capacity can improve scale, but it also increases depreciation and requires sufficient volumes to generate appropriate returns.

The timing of commissioning and the speed at which new capacity is utilised will therefore be important in FY27.

Any delay or slower ramp-up could reduce the expected earnings contribution.

Saverglass revenue was relatively stable

Saverglass revenue was EUR617.2 million, up 0.8%.

Volumes increased 5.9%.

Despite the higher volume, EBIT fell 20.6% to EUR62.8 million.

The divergence between Volume growth and earnings indicates continued pressure on pricing, mix or operating margins.

Saverglass serves premium wine, spirits and cosmetics markets, which can be affected by changes in consumer demand, inventory levels and export activity.

The FY26 result shows that higher volumes alone were not enough to offset Margin pressure.

Gawler Glass delivered higher EBIT

Gawler Glass EBIT increased 10.5% to A$28.1 million.

This provided some offset to weaker Saverglass performance.

Gawler serves the Australian glass packaging market and is exposed to domestic beverage demand and manufacturing costs.

Its improved earnings demonstrate that performance across Orora's glass portfolio was not uniform.

However, the scale of Saverglass means the broader glass result remains heavily influenced by conditions in international wine and spirits markets.

RAK Facility remains a key operational issue

Saverglass' RAK facility in the Middle East had been idled since April 2026.

No production was occurring during the idling period.

The facility is expected to restart in October 2026 on a restricted-volume basis using alternative Oman ports.

Idling costs were approximately EUR2 million per month before recommencement.

The restart will be important because extended disruption would continue to affect costs, utilisation and customer supply.

Logistics conditions and regional operating risks will therefore remain relevant to the recovery.

Furnace changes add to transition activity

A furnace at Le Havre was closed during the second half of FY26.

A rebuild at Ghlin began in May 2026.

Ramp-up is expected late in the first quarter of FY27.

Furnace rebuilds are capital-intensive but necessary to maintain production efficiency and asset reliability.

During transition periods, output and costs can be affected.

The timing and efficiency of the Ghlin ramp-up will therefore be another measure of whether Saverglass is moving towards improved performance.

FY27 group EBIT is expected to decline

Management expects group EBIT to be lower in FY27 than in FY26.

The outlook reflects higher depreciation and continued pressure on Saverglass earnings.

FY27 Capital expenditure is expected to be A$140 million to A$145 million.

This compares with A$194.3 million in FY26.

Depreciation and Amortisation are guided to A$180 million to A$185 million.

Net finance costs are expected to be A$63 million to A$68 million.

The effective tax rate is expected to be between 26.5% and 27.5%.

Cans volume growth remains a key support

Orora expects cans volume growth to remain broadly in line with its historical range of 4% to 6%.

This suggests the division is expected to continue providing growth even as the glass business remains under pressure.

The contribution from cans will depend on demand, pricing and the utilisation of the Rocklea capacity.

If volumes expand as expected, the division could partially offset weaker glass earnings.

However, higher depreciation from recent investment will also affect group EBIT.

Glass turnaround is a longer-term target

Management is targeting more than EUR30 million of net EBIT improvement in glass by FY30.

This implies that the recovery is expected to take several years rather than being completed in FY27.

The improvement is likely to depend on manufacturing efficiency, pricing, capacity utilisation and cost reduction.

Demand recovery in wine and spirits markets will also influence the outcome.

The target gives investors a longer-term benchmark against which progress can be assessed.

Net Debt increased during FY26

Net debt rose to A$481.1 million from A$254.2 million.

Net debt represented approximately 1.2 times EBITDA.

This remained below Orora's stated target range of 1.5 to 2.5 times.

The increase in debt reflects the group's capital requirements and investment activity.

While Leverage remains below the target range, weaker earnings or additional restructuring costs could affect the ratio.

Cash generation and capital spending will therefore remain important in FY27.

FY26 Dividend totalled 9 cents

Orora declared a final dividend of 4.0 cents per share.

The total FY26 dividend was 9.0 cents per share.

The dividend was unfranked.

The Payout Ratio was 78% of underlying net profit.

The dividend therefore represented a substantial share of underlying earnings.

Future distributions will depend on profitability, cash generation, debt levels and board decisions.

Share buyback remains part of capital management

Orora bought back approximately 56 million shares during FY26 for A$117.6 million.

The average purchase price was about A$2.10 per share.

The programme was paused in April 2026.

Management has indicated that it intends to resume the buyback following the result.

Buybacks reduce the number of shares outstanding, but they also use cash that could otherwise be applied to debt reduction or investment.

Capital allocation therefore remains relevant while the group manages the glass turnaround.

Key risks for FY27

Weakness in wine and spirits demand remains one of the main risks to Saverglass.

Margin pressure could continue if pricing does not offset energy, labour and manufacturing costs.

The RAK restart introduces operational and logistics risk.

Higher depreciation will weigh on group EBIT.

Rocklea commissioning also carries execution risk.

Net debt has increased, meaning Cash Flow performance will remain important.

Further impairments could occur if assumptions supporting glass asset values weaken again.

Currency movements between the euro and Australian dollar can also influence reported results.

What to watch next

The RAK restart in October 2026 will be one of the first major milestones.

Commissioning of the Rocklea cans facility will also be important for assessing future capacity and volume growth.

The Ghlin furnace ramp-up will provide another indicator of operational progress in glass.

Cans volume growth will remain a key earnings support, particularly if Saverglass margins remain under pressure.

Progress towards the longer-term EUR30 million-plus glass EBIT improvement target will also be watched.

Orora's FY26 result shows a business where cans are contributing growth while glass remains the principal constraint. FY27 is likely to remain a transition year as the company commissions new can capacity, restarts glass Assets and works towards improved margins.