Orora Limited (AU:ORA) tumbled by 14.7%, after the Australian company reduced its earnings forecast for FY24. The update also mentioned an unfavourable performance for Saverglass, which Orora acquired in 2023 from the Carlyle Group for AU$2.16 billion. The updated EBIT forecast for FY24, excluding Saverglass, now ranges from AU$307 million to AU$317 million, down from AU$320.5 million in FY23.
Orora Group is a global packaging manufacturer and distributor, offering a wide range of customized packaging solutions and displays.
Inside Orora’s Latest Trading Update
The company attributed the downgrade primarily to lower sales volume in North America. The company experienced a drop in its average daily sales over the past two months, nor is it expecting a further increase in daily sales this quarter. As a result, revenue for the second half of FY24 is projected to decrease by approximately 3% compared to the first half of the year. Moreover, FY24 EBIT is expected to range between $102 million and $107 million.
On the brighter side, the company is optimistic about its numbers in Australia over the long term, which is driven by solid performance from its Cans business.
Meanwhile, at Saverglass, the company anticipates weak trading conditions, especially in Europe, without any indications of improvements as customers continue to reduce inventories. This could lead to a downfall in sales of around 11% in the second half of 2024, as compared to a year ago. An uptick in volume is expected once the destocking cycle concludes.
Orora Share Price Target
According to TipRanks consensus, ORA stock has been rated as Moderate Buy backed by five Buy and three Hold recommendations. The Orora share price target is AU$3.08, which represents a growth rate of 32% from the current level.
