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Melbourne-based packaging giant Orora's (ASX: ORA) €1.29 billion ($2.16 billion) acquisition of Saverglass in 2023 ended up being its saving grace in the recent December half as the driver of increased earnings, but now the French subsidiary is receiving unwanted attention.
Orora has revealed to the market that today that its Saverglass office in France was visited by the French Competition Authority (Autorité de la Concurrence).
"At this stage, Orora understands that the French Competition Authority is reviewing potentially anticompetitive practices allegedly engaged in by participants in the French beverage glass container industry in the period prior to Orora’s acquisition of Saverglass," the company stated.
The Australian group claims it is cooperating with the French Competition Authority.
In January the authority reported a "record" year for 2024 issuing €1.4 billion in penalties and 11 "contentious" decisions that took aim at the likes of Google, as well as the precast concrete, low-voltage electrical equipment, household appliance and aviation sectors.
Orora completed its acquisition of Saverglass, a bottle manufacturer supplying to wine and spirits producers in 100-plus countries, from Carlyle Group in December 2023 after an almost $1.35 billion capital raise with the remainder paid by debt financing.
In its recent half-yearly results the group reported a 24.6 per cent increase in underlying earnings to $120.8 million. This was in large part due to the inclusion of Saverglass, without which EBIT would have been down by 30.1 per cent.
The lower result for the rest of its operations mainly resulted from a furnace shutdown at Gawler in South Australia, which Orora's CEO and managing director Brian Lowe said was hampered by bad weather and equipment delays, , impacting EBIT by $24 million.
"De-stocking across the Saverglass business continues, and while we have noted some encouraging signs of improved order intake, the pace of recovery in Europe remains uncertain," he said in February.
"Orora has managed softness in commercial wine and beer volumes in Australia for several years, and in light of this has undertaken a review of glass capacity across the Australasian market.
"This has resulted in the decision to move from a three furnace to two furnace operation at Gawler, and close our oldest furnace, the G1 furnace, in the second half of calendar year 2025.
"In turn, some existing production volumes will be redirected to our manufacturing site in the UAE. Furthermore, we plan to invest in modernising our Ghlin glass manufacturing site in Belgium, where all European wine and champagne bottles will be produced."
Total revenue was up 65.7 per cent at approximately $1.03 billion, with $655.5 million coming from the global glass business, but the aforementioned problems meant statutory net profit after tax (NPAT) was only just positive at $200,000.
Orora's share price was already down at the time over US tariff fears relating to its Mexican glass manufacturing facility, and eroded further from $2.34 before its results announcement on 13 February to $1.97 per share at the market close yesterday.
Today the stock has received another negative shock following the French Competition Authority announcement, dropping almost 9 per cent to $1.79 - a low not seen in more than a decade.
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