Australia's Orora plans to move some production abroad amid weak wine demand

Orora

13/02/2025 03:48

By Roshan Thomas
       Feb 13 (Reuters) - Australian packaging company Orora
Ltd  ORA.AX  said on Thursday it plans to close one of its
furnaces and shift some production abroad due to a slowdown in
the domestic commercial wine market, sending its shares to a
six-month low.
    The decision underlines the structural decline in the local
commercial wine market, with domestic consumption falling at a
faster rate than export growth to China.
    Orora cited cost-of-living pressures, a shift away from
beer, and increasing energy and labor costs as additional
headwinds.
    The glass bottles manufacturer said it would close the G1
furnace at its Gawler site in South Australia in the second half
of 2025 calendar year, transitioning from a three-furnace to a
two-furnace operation.
    "Some production volumes will be redirected to the Ras
Al-Khaimah site in the UAE to meet customer demand," Orora said
in a statement.
    The stock fell as much as 11.1% to A$2.080, posting its
biggest intraday percentage drop since April 2 last year.
    "A key point for the call (closure of G1 furnace) will
likely be additional remediation costs," analysts at Jefferies
said in a note.
    Orora plans to invest in modernising its Ghlin manufacturing
site in Belgium, which will become the primary production site
for European wine and champagne bottles, freeing up capacity at
its Ras Al-Khaimah site for the Australasian and U.S. markets.
    The glass bottles maker reported first-half underlying
earnings before interest and tax of A$120.8 million ($75.92
million), missing a Citi consensus of A$128 million.
    Analysts at Citi called the earnings as a challenging result
and said it would "take some time to digest (the results) in the
near term".

($1 = 1.5911 Australian dollars)

 (Reporting by Roshan Thomas in Bengaluru; Editing by Subhranshu
Sahu)
 ((Roshan.Thomas@thomsonreuters.com))