Packaging business Orora has announced a full-year profit increase of 28.3 per cent to $168.6 million, but expects to pay an extra $20 million-plus in energy costs over the next year.
Sky News reports that the Australian and North American business, which split from Amcor in late-2013, announced total revenues were up 13 per cent to $3.85 billion. 49 per cent of total sales were in North America.
However, gas and electricity prices remain a challenge, said CEO Nigel Garrard, and cost an extra $15 million over the year. In the next 18 months, he expects the company’s 31 packaging and glass plants will pay “north of $20 million” extra due to the situation.
“There is no doubt energy costs in Australia are an issue for manufacturing. Period. And we are no different from anyone else,’’ Garrard said, according to The Australian.
“What will happen over time is the market will rebase pricing based on the new cost basket and ultimately those costs will need to be passed through to our customers and their (gas and utility company) customers.’’
The Australian Financial review reports that Garrard expects the US to outperform Australia’s economy in the next six to 12 months, with energy prices playing a role in weak economic conditions.