Material Sector Stocks – ORA, IPL, FBU

The S&P/ASX 200 Materials Index covers a diverse range of commodity-related manufacturing industries such as construction materials, chemicals, glass, paper, forest products and associated packaging products, producers of steel and others. The Index is trading down 0.43% at 14,030 (on 10 July 2019 AEST 01:06 PM). Discussed below are three materials companies in Australia.

Orora Limited

Orora Limited (ASX: ORA), headquartered in Hawthorn, Australia, is a producer and supplier of packaging products, serving customers in Australia, New Zealand, the United States, and worldwide. The company is also engaged in offering services. It caters to the grocery, industrial and fast-moving consumer goods markets. With a market capitalisation of around AUD 3.95 billion and around 1.21 billion shares outstanding, the ORA stock is trading at AUD 3.295 on 10 July 2019 (AEST 01:41 PM), up 0.765%. In addition, ORA has an annual dividend yield of 3.98% and its EPS stands at AUD 0.184.

Challenger Limited and its related entities became a substantial shareholder in ORA on 5 July 2019 upon purchase of around 60,508,834 fully paid ordinary shares, translating into a voting power of 5.01%, according to a company announcement on 9 July 2019.

Board Changes – On 9 July 2019, ORA Chairman, Chris Roberts, announced that he will continue as Chairman into 2020 to assist with a smooth transition of the new leadership on the retirement of Nigel Garrard (effective 30 September 2019) and the appointment of Brian Lowe as Managing Director and Chief Executive Officer (effective 1 October 2019).

In May 2019, the company released its Macquarie Australia Conference Presentation, touching upon the Orora overview and FY19 half year results, business group overview and performance, M&A integration update, Orora’s blueprint for creating shareholder value and innovation update, its approach to sustainability, corporate and trading update as well as outlook.

FY19 half year results – As per the result highlights for the half year ended 31 December 2018, Orora  recorded a net profit after tax (NPAT) of $ 113.7 million, up 7.6% from the same period a year ago, while its sales revenue grew 9.9% year-on-year to $ 2,305.5 million during the reported period. In addition, the company delivered an EBIT of $ 175.1 million for the first half of FY19, up 5.9% on previous corresponding period.

During the concerned period, the company’s Australasian businesses Fibre Packaging and Beverage unceasingly showed their resilience, while benefiting from the recent organic growth initiatives and investments in innovation, along with an ongoing focus on bringing about improvements in manufacturing and operating efficiency. Orora adopted and executed its strategy of disciplined return driven allocation of growth capital, with the acquisition of Bronco Packaging Corporation (effective 1 September 2018) and Pollock Packaging (effective 1 December 2018).

Incitec Pivot Limited

Incitec Pivot Limited (ASX: IPL), headquartered in Southbank, Australia, is an industrial chemicals company, which manufactures, trades in, and distributes industrial explosives, industrial chemicals, and fertilisers in Australia, the United States, Canada, Turkey, and other regions worldwide. Incitec’s market capitalisation stands at around AUD 5.23 billion with ~1.61 billion shares outstanding. The IPL stock is trading at AUD 3.210 on 10 July 2019 (AEST 01:57 PM), down 1.534%. The company has an annual dividend yield of 2.3% and its EPS stands at AUD 0.147.

Range 4 Spuds Recently on 1 July 2019, Central Petroleum Limited (ASX: CTP) announced that Range-4, the first well in the Project Range exploration programme, had been spud on 30 June 2019 at 15:00 hrs AEST, demonstrating the company’s ability to rapidly progress with exploration and commence the scheduled Range drilling programme in the June quarter. Project Range is a JV (50:50) of Central Petroleum with one of Incitec’s wholly owned subsidiary in ATP 2031, a 77 km2 permit located in the Surat Basin, where Incitec is bound to contribute up to $ 20 million of the exploration and appraisal costs. The drilling programme is expected to last for 8 weeks.

Earlier on 21 June 2019, Incitec Pivot had announced an update on Project Range and Dukas 1, an exploration well aiming to assess the regional sub-salt play at the Dukas structure in EP112 in the Amadeus Basin. The well drilled to 2,997 metres measured depth in the Gillen formation. The company informed that drilling had been delayed at Dukas 1 and was expected to resume by around 22 June 2019 due to ongoing repairs.

Board Changes On 18 June 2019, Incitec Pivot informed the stakeholders that Mr Paul Brasher has decided to retire from the company as the Chairman and as a Non-Executive Director on 30 June 2019 due to health-related reasons. Consequently, the Board appointed current Non-Executive Director, Mr Brian Kruger, as its new Chairman, effective 1 July 2019.

A snapshot of IPL’s half year results for the six months to 31 March 2019 is given below-

Fletcher Building Limited

Fletcher Building Limited (ASX: FBU), headquartered in Auckland, New Zealand, together with its subsidiaries, is engaged in the manufacturing and distribution of building and construction products in New Zealand, Australia, North America, Asia, Europe, and internationally. With a market capitalisation of AUD 4.1 billion and approximately 853.35 million shares outstanding, the FBU stock is trading at AUD 4.875 on 10 July 2019 (AEST 2:00 PM), up 1.351%. In addition, the company has an annual dividend yield of 1.35% and its EPS stands at AUD 0.222.

In an ASX announcement on 9 July 2019, the company unveiled the appointment of Mr Daniel Anthony as Chief Information Officer. Mr Daniel Anthony will assume the role from 29 July 2019. The appointment comes after FBU made an announcement on 7 May regarding the plans of Mr John Bell to retire from the company in 2H 2019.

Earlier on 26 June 2019, Fletcher Building announced that it would undertake a capital return to shareholders of up to NZD 300 million through an on-market share buyback, scheduled to commence following the release of the company’s full year results for FY2019. The financial results for the year ended 30 June 2019 are expected to be released prior to the market opening on Wednesday, 21 August 2019. The company’s half year results to 31 December 2018 can be READ here.


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