Orora has warned it expects its power bill to rise by as much as $8 million in each of the next two halves as the packaging business looks for alternate supplies amid surging east coast electricity prices.
Orora shares rose on Wednesday after it reported a lift in profits and revenue, but the group said it is still concerned about the impact of power prices on earnings at its NSW recycled paper mill.
“The Australian electricity market is expected to continue to be volatile for the foreseeable future and presents further potential downside risk,” Orora said on Wednesday.
Orora said it has a number of initiatives in a bid to reduce energy consumption, including a new $23 million secondary water treatment plant – due to be completed by June – which will generate bio-gas to be converted into electricity and used on site.
The company has also signed a long-term power deal with renewable energy provider Pacific Hydro to supply wind generated electricity to its South Australia operations.
“Renewable energy represents a competitively priced and sustainable energy source for the business,” Orora said.
“Contracting directly with Pacific Hydro, Orora will reduce the businesses exposure to fluctuating prices of the wholesale energy market.”
The company said it will continue to assess further energy efficiency projects and supply options.
Orora’s Botany mill produced 204,000 tonnes of recycled paper during the first-half, compared to 186,000 a year ago, and was the primary driver in higher fibre earnings.
Orora lifted first-half profit 12.7 per cent to $103.8 million thanks to a boost from its core businesses and growth in earnings from recent acquisitions.
Net profit before the $1.9 million cost of restructuring its NSW fibre packaging business and decommissioning another site came in at $105.7 million, while revenue rose 6.2 per cent to $2.1 billion from $1.975 billion a year ago,
The company says its Australasia segment delivered an 11.1 per cent increase in earnings to $121.1 million, with sales revenue up five per cent to $1.04 billion.
Orora shares were up 10.5 cents, or 3.3 per cent, to $3.295 at 1500 AEDT.
ORORA PROFIT AT A GLANCE:
* Profit up 12.7pct to $103.8m
* Revenue up 6.2pct to $2.1b
* Partially franked interim dividend up 1.0 cent to 6.0 cents