Orora Limited (ORA.XA) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Orora Limited Fiscal Year '25 Full Year Results. [Operator Instructions] I would now like to hand the conference call over to Brian Lowe, Managing Director and Chief Executive Officer. Please go ahead.

Thank you. Good morning, everybody, and thanks for joining us today for the Orora Group Full Year 2025 Results Presentation. I'm joined by Shaun Hughes, our Chief Financial Officer. Today, Shaun and I will provide you with an overview of our results for the year and an update on the significant amounts of activity within the business as we reshape the portfolio to be a focused beverage packaging business. At the end of the presentation, I'll conclude with some insights and perspectives for the year ahead, including our outlook statement for FY '26. Once concluded, we will be happy to take your questions. Before I start, please take note of the important information we have on Slide 2. Turning to Slide 4. Today, we'll be delivering the following key messages. First, we have delivered a solid set of results in FY '25, which demonstrates the resilience of our business. Second, our Cans business is set up to grow strongly into the future as we leverage the investment in new capacity. Third, the operating environment for our glass business has been challenging, and therefore, we have taken decisive action on the network to optimize capacity. And finally, our balance sheet remains strong, which supports ongoing shareholder returns through dividends and on market buybacks. Turning to Slide 5 and our full year results. The results you see here today are on a continuing operations, excluding significant items, except where noted. The results of OPS and closures have been treated as discontinued operations. Shaun will also provide details of our statutory numbers later in his presentation. EBITDA was $418.8 million, an increase of 19.4%, which was driven by Saverglass with a full year's contribution compared to 7 months in the prior comparative period. EBIT was $262.1 million, an increase of 9.5% with growth in EBITDA partly offset by higher depreciation, again, driven by Saverglass. When talking about Saverglass in more detail shortly, the comparison will be on a pro forma basis. The Cans business was broadly in line and Gawler was impacted by the G3 furnace shutdown in the first half. Statutory NPAT was $973.1 million, including the profit on sale for OPS. On a continuing basis, excluding significant items, NPAT was $151.1 million, while EPS was $0.114 per share. Operating cash flow was very strong at $333.6 million and cash realization of 115% demonstrates our continued focus on managing cash. This cash flow outcome reinforces the strength of our balance sheet with net debt of $254 million and leverage at 0.7x EBITDA. Our strong balance sheet and commitment to returning funds to shareholders has resulted in the Board today declaring an interim dividend -- sorry, a final dividend of $0.05 per share unfranked and brings the total dividend for the year to $0.10. We've also made good progress on the buyback with $127 million or almost 5% of issued shares bought back to date, and we'll be actively buying shares again shortly. Turning to Slide 6. Our Orora Cans business had a good volume and revenue growth year. Volume growth was very strong, particularly in the fourth quarter with underlying demand elevated and some inventory build by our largest customers as they commissioned new filling capacity in Queensland. This, combined with the commissioning of the second line at Revesby, resulted in 6% volume growth for the year, driving revenue 12.1% higher or 8.9%, excluding the pass-through impact of aluminum prices. Reported EBIT increased 0.2% to $103.8 million, noting that this includes an additional $5 million of corporate costs following the sale of OPS and a $2.1 million bad debt. If we exclude these items, EBIT increased 7%. The commissioning of the second line at Revesby was completed, and we have recently begun digital printing our first cans using Helio. This provides a very exciting and unique value proposition for our customers. The third line for our Rocklea facility in Brisbane is under construction and will be complete by the end of FY '26. This will bring our current capacity expansion program to an end. After a very strong fourth quarter, we expect volume growth to be slightly moderate in FY '26 to our long-term average. For Saverglass, the operating environment remains challenging due to the ongoing tariff situation. The headline numbers here are on a pro forma basis, which provides a more accurate comparison. Revenue decreased by 16.5% with volumes down 12% and the impact of mix shift that we talked about during our update in May. Pleasingly, volumes were 9% higher in the second half compared to the first half, which reflected the stronger order book that we've seen since late calendar 2024. We believe this, in addition to inventory levels remaining fairly stable, is an indication that destocking is substantially complete. EBIT decline was moderated to 5.5% due to cost reductions, synergies and lower profit sharing. This demonstrates the actions we have taken in order to shore up the cost base, which will also benefit the business as volume grows. Further actions such as the closure of the F4 furnace at La Havre will also improve the cost base. And finally, Gawler's result, which reflects the declining beer and commercial wine market for glass and the impact of the G3 furnace rebuild in the first half. The G3 rebuild is now complete and operational and the G1 furnace closure is well advanced, which will drive improved operational and financial returns in FY '26. Turning to Slide 7. As mentioned, our Saverglass order intake has strengthened this year. And although it has slowed since February, aggregate orders were 21% higher for the second half compared to the prior year. We have seen a stronger order intake in July, primarily driven by tequila with demand in Europe remaining subdued. On the right-hand side of the slide is an update of inventory levels. Total inventory levels have been fairly steady since January. However, customer-owned inventory is more than 50% lower than the peak in December 2023. Turning to Slide 8 and the capacity additions we've been making in Cans. As we detailed at our Investor Day in May, our Cans business has been delivering strong volume growth with CAGR of 5.5% between FY '16 and FY '23. This has been driven by shifting consumer preferences and growth in new product categories such as craft beer, RTDs, energy and kombucha. As our network was over full in 2023, we started investing in additional capacity alongside new investments being made by our customers. If we didn't do this, our EBIT growth would have been constrained to 1% to 2% per year as we would not have been able to fulfill our customers' requirements. Our program of capacity expansions will total more than $350 million in capital spend when complete next year and is expected to deliver an incremental $50 million of EBIT in real terms by FY '30. To date, we have already spent 75% of the capital, but have only realized 30% of the EBIT as each project takes about 3 years to ramp-up to the expected utilization. Therefore, we are entering a period of substantial earnings and cash flow leverage for our Cans business with only the Rocklea expansion remaining. Once this is complete in late FY '26, we'll have the capacity to grow volumes by approximately 5% each year and still not need to invest further capacity expansions before 2030. Turning to Slide 9. The story is somewhat different for our Glass business with actions focused on optimizing capacity in response to changing demand. For Saverglass, we have 2 major projects underway, the rebuild of Ghlin in Belgium and the closure of the F4 furnace at La Havre in France. As a reminder about Ghlin, this project will see all champagne and winer bottle production consolidated into a single site, which will improve efficiency and make this furnace our lowest cost furnace in Europe. With the recent mix shift we've been witnessing, this project takes on increasing importance. This project allows capacity in the UAE to be freed up for other markets, which I'll also talk about shortly. We have revised timing for Phase 1 of the Glynn rebuild, which is now due to commence next May with EUR 17 million to be spent across FY '26 and FY '27. Phase 2, if approved, will total EUR 18 million and will not occur until at least FY '28. Although it is not currently operating, the shutdown of the F4 furnace at Le Havre is significant for the company as Saverglass has never permanently closed the furnace. The team is following a very detailed and comprehensive process with our employees and the local unions in France. The outcome of the consultation process is expected to conclude by the end of November 2025 with impacted employees then notified. The closure will result in an annual EBIT benefit of EUR 9 million with around half of that achieved in FY '26. We retain the optionality to upsize the remaining F3 furnace at La Havre in the future if the market conditions allow. And finally, at Gawler in Australia, where the declining commercial wine environment has resulted in the closure of the F1 -- sorry, G1 furnace and our site transitioning to a 2-furnace operation. The G3 rebuild is now complete and fully operational with improved efficiency and carbon emissions, which enables Gawler to operate at a high utilization rate once G1 is closed. Like La Havre, we are following a thorough and detailed plan and expect the closure to be complete by late August or early September with a reduction of approximately 85 roles. Surplus demand will be moved to the UAE, which mitigates the risk of further volume declines as we can flex production between Gawler and the UAE to maximize the Gawler 2 furnace operation at high utilization. We estimate the closure will deliver around $17 million of EBIT benefit compared to running a 3-furnace operation. And with that, I'll now cover off an update for you on safety and sustainability. Turning to Slide 11 and safety. Please note, all data now includes Saverglass. The value of our global health and safety strategy is apparent with continued strong safety performance. In FY '25, lost time injury frequency rates improved 35% and recordable case frequency rates improved 5% with no serious injuries or fatalities recorded. This is a true reflection of our ongoing focus on communication, continuous improvement activities and programs to identify hazards as well as manage risks. Our attention now turns to the implementation of our FY '26 to FY '28 Global Health & Safety strategy, which will build on the previous strategy by maintaining focus on safety awareness and embedding safety culture across all Orora sites. The health, safety and well-being of our people remains a fundamental and ongoing commitment at Orora. We will continue to focus on ensuring our safety programs improve performance even further through our targeted improvement programs. Now turning to sustainability and our promise to the future on Slide 12. We continue to make strong progress against our targets for recycled content and emissions reductions, and we are pleased to announce new global targets inclusive of Saverglass. We have achieved 59.5% recycled content for glass, and we're well on track to exceed our 60% target by the end of calendar year 2025. Our new recycled content target is 68% for colored glass by FY '35 as we continue to expand our color sourcing programs. In Cans, we are committed to maintaining a high level of recycled content through FY '30. For emissions reductions, our new group target equates to a 41% reduction of Scope 1 and Scope 2 emissions by FY '35. These targets will be enabled by our ongoing investment in decarbonization of the glass network. Our recent investment in the oxygen plant at Gawler has resulted in the G3 furnace being one of the top 10% of energy-efficient furnaces in the world. Importantly, today, we are disclosing our Scope 3 emissions for the first time and are committing to future reduction targets. For the Orora Group, we are targeting a 31% reduction in Scope 3 emissions by FY '35. Overall, I am extremely proud of the achievements of our entire team in this important area. I'll now hand you to Shaun to discuss the group and segment financial results.

Thanks, Brian, and good morning, everyone. Before I take you through the group's FY '25 financial performance, I just want to take a moment to revisit our key financial priorities as set out on Slide 14. This slide is from our recent investor update and provides a summary of the key financial priorities for the company. The results today are consistent with our key financial priorities, specifically our minimum 15% target return on organic growth CapEx and our target dividend payout ratio of 60% to 80% of NPAT, all whilst maintaining investment-grade credit metrics. Turning to Slide 15. I'll start with the group results before I cover the segment's financial performance. This slide summarizes the group's underlying and statutory earnings result for FY '25. The numbers I will initially focus on are for the continuing operations only. Therefore, these exclude the results for OPS and closures prior to their divestment. They also exclude significant items with our statutory numbers shown at the bottom of the page with further detail on Slide 32. At a group level, revenue increased 24% to $2.1 billion with a full year contribution from Saverglass compared to 7 months in the prior period. Outside of the increase in Saverglass revenue, Gawler revenue increased 1.5% and Cans increased 12%. Group EBITDA increased 19% with the additional Saverglass contribution being partially offset by the impacts of the G3 rebuild in the first half. Depreciation and amortization increased by $45 million, reflecting the additional 5 months of Saverglass. Net finance costs were marginally lower at $67 million, consistent with our guidance of $65 million to $70 million as the balance sheet was reset following the sale of OPF. Net finance costs will reduce further next year, and I will provide more details later in the presentation. NPAT of $151 million has increased 18% with lower interest and an effective tax rate for the year of 22%. This reflects R&D credits and a greater portion of Saverglass earnings in lower tax regions in the period. We expect our long-run effective tax rate to be around 25%. EPS was $0.114 per share, an increase of 11%. Moving now to the Orora Cans business on Slide 16. As Brian mentioned earlier, there are 2 key items that mask a stronger underlying performance for cans. A strong second half delivered full year volume growth of 6%. The fourth quarter was particularly strong as customers' built inventory in Queensland to support their new filling investments. This delivered revenue growth of 9%, excluding the impact of pass-through aluminum prices. EBITDA and EBIT increases were moderate on a reported basis due to the inclusion of an incremental $5 million of corporate costs following the divestment of OPS and a $2.1 million bad debt incurred in the second half. Whilst headline Cans EBIT was an increase of 0.2%, underlying EBIT growth was 7% against 6% higher volumes. Cans depreciation increased modestly in the period with Revesby only being commissioned late in the second half. Cans depreciation will, therefore, increase in FY '26 by approximately $4 million with a full year of depreciation for Revesby and Helio. The total CapEx was $124.7 million. This will decrease in FY '26 as only the Rocklea expansion remains in our growth CapEx program. Turning to Slide 17. As FY '24 included only 7 months of Saverglass earnings, the comparisons on this page are pro forma FY '24. The impact of destocking and the uncertainty for customers regarding tariffs for exports to the U.S. contributed to a reduction in volumes of 12% with revenue decreasing 16.5%. Importantly, we have seen a recovery in volumes in the second half with volumes up 9% on the first half. Whilst revenue in the second half was broadly in line with the first half, as previously flagged, we saw a mix shift to wine and champagne bottles as our sales activity generated better volumes in these areas. These products have a lower price point. We have also seen some reduction in overall pricing as cost deflation is passed through to customers. Importantly, our pricing is holding in real terms. Against this volume decline, EBITDA and EBIT both decreased around 5%, and this demonstrates the success we have had in reducing the cost base in this period of lower customer demand. This included lower employee profit sharing costs, which is ultimately determined by the performance of the business. Depreciation of EUR 65.7 million was slightly lower year-to-year, reflecting the first half benefit of aligning the Saverglass depreciation policy for molds with that of Gawler. We expect depreciation to be in the low mid- EUR 70 million range in FY '26, which reflects the second half '25 run rate plus some additional depreciation on new molds for wine and champagne customers. Total CapEx spend was EUR 30.8 million with molds being EUR 10.8 million and early works for the Ghlin furnace being EUR 6.6 million. The spend on molds is classified as both base and growth CapEx, depending on whether it is for existing customers or new products. Turning to Slide 18. Gawler results were consistent with expectations with revenue up moderately on flat volumes and EBIT impacted by the G3 rebuild. Wine and beer volumes declined with beer driven by a format shift to Cans and wine continuing to experience soft customer demand. Whilst the volumes of other products such as olive oil and food jars increased, this is a less profitable business for Orora. EBITDA of $57 million and EBIT of $25 million included the impact of the G3 furnace rebuild with EBIT also including a moderate increase in depreciation. Depreciation will increase approximately $6 million in FY '26 with a full year of depreciation for G3 and the new oxygen plant. CapEx will step down materially next year with only minor base CapEx required going forward. Turning to Slide 19. Orora has delivered a strong operating cash flow for continuing operations of $334 million, an increase of 46% with an additional 5 months of Saverglass performance and a strong working capital improvement. The working capital improvement reflects an unwind of the Gawler inventory built ahead of the initial G3 rebuild, a payables benefit from the timing of aluminum purchases supporting the increased volumes. And whilst Saverglass working capital improved in euro, the weaker Australian dollar meant that working capital was slightly higher on a reported basis year-to-year. The strong operating cash flow performance after CapEx, interest and tax has flowed through to free cash flow available to shareholders of $97 million. This will further increase in FY '26 and beyond with only the Rocklea project remaining in our Cairns CapEx program. Cash realization at 115% highlights our commitment to cash management. Turning to Slide 20. This slide is from our May investor update with updated FY '25 cash realization numbers. As a reminder, cash realization is defined as EBITDA less the movement in working capital and any noncash items over EBITDA. This is our preferred cash metric as it demonstrates our working capital efficiency. Cash realization is above 100% given the working capital movements I just mentioned. Turning to Slide 21. CapEx was $263 million this year, higher than FY '24 as we completed some important projects, namely: the G3 rebuild and the oxygen plant at Gawler; and the Revesby the expansion for Cans. In FY '26, we expect total CapEx of around $200 million with base CapEx consistent with our long-term target range and a reduction in growth CapEx as we near the completion of our Cans growth CapEx investment program. Beyond FY '26, you can see that base CapEx will be $70 million to $95 million per year and the decarbonization CapEx for Saverglass will be $15 million to $25 million per year for a total of $85 million to $120 million per year. Outside of the remaining capacity investments, there will be some modest growth investment as noted to support new customer molds and productivity. We are not expecting to add any new network capacity until the next decade. And importantly, any new addition in capacity will be clearly flagged and will be subject to our investment hurdles. Depreciation will increase in FY '26 to between $180 million and $185 million as the newly commissioned projects are depreciated. We will have 12 months' worth of depreciation for Revesby, Helio and the G3 and oxygen plant, partially offset by the impact of the G1 closure. Saverglass depreciation is expected to be in the low to mid EUR 70 million range in FY '26. Slide 22 highlights Orora's balance sheet and net debt position, which is very strong following the sale of OPS. As at the 30th of June, net debt was $254 million with leverage at 0.7x net debt to EBITDA. This will increase next year as we continue to execute our CapEx programs and our on-market buyback program. Net finance costs in FY '26 are expected to be approximately $55 million to $60 million. This assumes that 10% of shares will be bought back on market within FY '26. That is, we complete the remaining 5% under the existing buyback program and commence another buyback during FY '26 to maintain the 10% run rate over a 12-month period. Our net finance costs comprise more than just interest and include the following items: interest on our drawn gross debt at approximately 4.5%; ROU interest for leased assets of around $8 million; supply chain predominantly for aluminum supply contracts and other uncommitted working capital financing arrangements; and any other items such as commitment fees payable for undrawn facilities. The 2 main reasons why this is higher than the run rate from second half of '25 is average higher debt drawn of around $300 million and lower capitalized interest given the completion of recent capital projects for Gawler and Cans. As a reminder, interest is capitalized when a project is under construction once commissioned, it is then amortized over the useful life. Slide 23. The Board has declared a final $0.05 per share dividend, which represents a payout ratio of 69% of continuing operations for the half, consistent with our target payout ratio. This brings the total dividend for the year to $0.10 per share. The dividend is unfranked, but we expect to be able to partially frank dividends in FY '26. Our buyback has progressed well with 62 million shares purchased for a total consideration of $127 million. We will be resuming the buyback shortly. I'll now hand back to Brian.

Thanks, Shaun. I'll turn now to Slide 25 and a reminder of Orora's investment proposition. We believe the results today demonstrate Orora's well-invested asset base and its cash flow generation capabilities. We've taken action to optimize capacity in glass and continue to invest to support our Cans customers. As we look at FY '26 and beyond, the majority of our Cans growth CapEx will be complete, and we will enter a period of substantially higher cash flow generation. Turning to Slide 26, and I'll cover our FY '26 perspectives in more detail. For Cans, the demand tailwinds are positive, and customers have invested in new filling capacity, which we have supported with our own capital investments. Our digital printer Helio is operational, and we have recently produced our first digitally printed cans for our customers. The Rocklea expansion continues and is on track for completion in late FY '26. And we expect volume growth to continue and be consistent with our long-term projected growth rates. For Saverglass, order intake remains solid, but below the very strong October to February period, although July orders were sharply up, driven primarily by tequila. We are still seeing the mix shift towards standard premium wine and champagne, and we expect this will persist at least through the first half of FY '26. And while the operating environment remains uncertain, there has been some recent positive news for the cognac industry, where an agreement between China and the EU producers on price increases has resolved the recent trade dispute. This is a welcome development, and we have seen an uplift in orders for cognate bottles in the recent months. U.S. tariffs remain very fluid. Currently, Mexican production sold into the U.S. is exempt from tariffs under the USMCA. The proposed 15% tariff on EU production should be manageable at the ultra-premium spirits and wine segment, although we are yet to see any clear responses from our customers. And there is an opportunity for the industry to achieve better outcomes than the 15% given proposed discussions that have been flagged between the parties. For Gawler, we expect a continuation of volume trends that we've seen this year, being lower volume for wine and beer and higher volumes for other categories. This trend has necessitated the decision to close G1, which is expected to be complete within the next month. Turning to our outlook on Slide 27. For Cans, we expect EBIT to be higher with volumes consistent with our long-term growth rates, and that supports EBITDA growth. This EBITDA growth will be partially offset by an additional $5 million in corporate costs and additional depreciation from the completion of the recent capital growth projects. For Saverglass, FY '26 EBIT is expected to be broadly in line with FY '25. Volume growth and cost reduction initiatives will support higher EBITDA compared to FY '25, but this will be offset by higher D&A. And for Gawler, EBIT is expected to be approximately $30 million due to the operational benefits from running a highly utilized 2 furnace operation. For the group, this results in EBITDA and cash flow growth being delivered by all businesses. This growth will be partially offset by the impact of an additional $7 million of corporate costs that were previously allocated to OPS that are now being absorbed by the remaining group and with higher D&A then tempering FY '26 EBIT growth. As always, this outlook remains subject to global and domestic economic conditions, fluctuations in currency and no further changes in U.S. tariffs. Thank you all for listening to our presentation. Operator, if you can now open the line for questions.

[Operator Instructions] Our first question today comes from Ramoun Lazar from Jefferies.

I've just got a couple on Saverglass, if that's all right. Just maybe your comments in the outlook slide on the volume outlook for Saverglass. If you could just point to where that volume growth is coming from that you expect in '26 and whether you expect that to be broadly across the first and second half?

What we have seen is that the underlying demand across most categories has been fairly stable and subdued. And the volume growth that we have achieved in the second half of FY '25 was really new business that the team have been able to conquest primarily in wine and champagne. So we're not banking on underlying demand picking up from the consumer at this point, but we are continuing our endeavors to grow new business. So that's where we would expect it to come from. Certainly, as that flows through, we're still seeing some variability in terms of the timing of that demand, certainly lapping the first half where we did see a higher number in the second half versus the first half. Historically, seasonality-wise, in a normalized world, we would see the first half being stronger than the second half. So it is a little bit difficult for us to project at the moment. But with underlying consumer demand being fairly stable, we would still expect that we are able to continue to grow, although it's going to be in specific segments other than spirits, which take a longer turnaround time at that premium end.

Got it. That's very clear. And then just taking your guidance number for Saverglass at an EBIT level, but converting it back to euros and then adding that D&A guidance, it implies EBITDA grows very slightly in constant currency terms. I'm just trying to piece together why that might be given the comments on higher volumes and the operating leverage you should be seeing as a result of what you've done to the cost base. Is it just a mix issue?

No. I mean in terms of mix, what we're actually seeing is, as we've said, an increase in wine and champagne. But what's driving that slightly higher guidance in EBITDA is just the cost actions that we continue to drive through the business. We think that price is holding. We've done a lot of work around really understanding the price point in the market and how that's moving in real terms, and we're very comfortable with that holding. So really, what's driving it is the outlook on volume that Brian mentioned and then continuing to drive the cost within the business. I should also add, in terms of our outlook, what we have done is we give that outlook in Australian dollars, but we're assuming constant currency with FY '25. Yes, not the spot.

Our next question comes from Daniel Kang from CLSA.

So I guess this one is for Sean. Just against your guidance in May, it looks like Saverglass performed much better in the second half, 13% higher than first half. So well above your guidance of broadly flat half-on-half. Can you just help us unpack the key areas of positive surprise there?

Yes. I mean, I think we talked in May, and we've talked a number of times about the work we've been doing to drive volume growth, particularly in wine and champagne. And you can see that the circa 9% growth between the first half and second half is really a testament to the success that the team has been able to deliver in that campaign. That's really what's driving the benefit, plus also continuing to get traction around cost out as we focus on every aspect of the business.

Got it. And just sticking with Saverglass, Brian, can I ask you to comment on the competitive landscape? Yes, I guess the market is moving down to the standard premium segment in the current environment. But over the medium-term, how do you assess the risk of your rivals moving up to the ultra-premium segment?

Well, what we've seen is probably stable demand at a lower level in the ultra-premium -- premium plus and ultra-premium. The noise we've had to deal with is obviously the destocking. So it's hard to get a handle on the underlying demand, but we know that it has been fairly stable of late. In terms of the future, we don't see there are any negative impacts relative to the premiumization trend and the premium segments that we would expect will outgrow the segment as a whole. So we still subscribe to that. In terms of competitive landscape, thus far, as Shaun mentioned, net-net price on our existing products is holding still pretty well. So we haven't been under price pressure for the existing premium segments. There's no doubt our competitors like us are somewhat underutilized on capacity. So whether it would be a new contract or a new opportunity, there is absolutely competition for that, but we're extremely well positioned and as I said, and holding. In terms of the commodity and glass manufacturers moving up into ultra-premium, we really don't see that. It's been talked about a bit. But I think as we've referred to and shown investors when we've done some site tours in Saverglass, the business model is completely different. Configurations of your furnaces, operating lines, manning levels, all of those things are completely different. So it's not as easy as people say when they say, well, we'll move into the ultra-premium segment. The short-run nature of it and quality standards are completely different. So we haven't really seen that progressing. We did even see one of the largest global glass makers with a technology that they were deploying that was supposed to be able to deliver shorter-run products are now saying they're not going to continue to invest in that technology. So we think we're still in a very good position.

Our next question comes from Jakob Cakarnis is from Jarden Australia.

I just wanted to start, if I can, Shaun, just on the net finance part. I think you alluded to it on Slide 22 in your prepared remarks, but it seems as though there's potential that the buybacks reloaded through fiscal '26. Can you just give us a sense of how you're thinking about that and where the leverage is, so 0.7x exiting FY '25 against the target range of 1.5x to 2.5x, why you wouldn't go above, say, a 10% share repurchase level?

Yes. Well, I think, firstly, the assumption that we've got is to do 10% -- consistent with the 10% within 12 months rule. We have a lot of conversations with many of our investors about the rate and pace that they would like to see us progress the buyback, and we think that this really reflects the rate and pace that our investors would like us to progress. And then in terms of the modeling assumption, the modeling assumption is that we do that, and therefore, we carry the extra debt associated with that buyback. That will likely yield a circa 7% to 8% lift in -- or reduction in the number of shares by the time you take into account the average number of shares within the period. So we -- just as a reminder, we finished the year with about 1.2 billion shares, 1,280 million. The average for the EPS calc was [ $13.25 ]. If you were to model that out, you'd expect probably the average number of shares next year in FY '26 to be somewhere just shy of 1,200, 1,190, something like that, depending on how quickly we can progress it.

Awesome. That's helpful, Shaun. And then just on Saverglass, obviously, highlighting the efforts that you guys have done on costs there. Can you just talk about the sustainability of that cost base now, particularly with the network changes at Le Havre? And then just remind us how that profit sharing arrangement works, if things do stabilize and improve there, how much of that potentially comes back? Is it works on a fixed formula basis? I'm just keen to think about that over FY '26 and FY '27? And then just finally, sorry, Shaun, before you start, are there any signs at all that those wage subsidies or the local government support in France are lessening or could end in FY '26 or FY '27, please?

Maybe I'll answer part of that question, I'll let Shaun do the rest. Majority of the cost reductions are sustainable. I mean, obviously, taking a furnace out in Le Havre, therefore, we're flagged that's around EUR 9 million per annum savings. So that's real. There have been some other cost reductions in terms of structural costs with broader employee base that we've taken out. The team worked really hard with the supplier base to ensure that we're taking advantage of any lower cost where we can. Now some of those flow through to customers as part of the formulas that we have in place. So we're -- I think we're fairly confident that the reduced cost base can be maintained. And therefore, as we get future growth that we can leverage that up. That is also predicated on the right sort of mix being put through the facilities at the time so that we don't have that continuing mix effect. And when it comes to the wage subsidies, maybe Shaun, you can talk on that.

Yes. So look, in terms of the wage subsidies, we've sort of flagged that as generally about a couple of million. That will cease for the half, but then so too will the labor costs for the half, and that's in the profit guidance that we've given. There's still a bit of short time working in some of the other sites. So we do get a little bit of benefit there as well. In terms of profit share more broadly, I mean, obviously, it's part of how we pay our employees. So we need the business to perform at the levels that we would expect it to be at. And so we would like it to be in a position where we're paying profit share, but that's -- it's not there today.

Understood. And then finally, just one for Brian. Given now how the network is set up, where do you feel like your rights are to play? Clearly, Global Glass feels like it's stabilizing. Cans, you've carved out a pretty dominant position domestically. What do you need to get right in the next 2 to 3 years in your view? Are we in an execution phase now for you as a management team following the large reset?

Yes, absolutely. So it is all about execution. We've got -- yes, we're very confident with the position we've now got within Cans. So we are within 12 months of finalizing those growth CapEx investments, and we're on track with the timing of those. And then as we've said, that will start to generate some really positive cash flow out of that business for quite a number of years before we need to look at further investment. Saverglass. Yes, we're continuing to look for opportunities to further drive down costs and drive efficiency and really instill global practices and processes within that business. We've appointed a new President, who's only been on Board now for about 6 weeks, but already getting right into the business and really looking for what those future opportunities are. So we're trying to tackle that from both angles, which is how do we generate our own growth, not relying on the market recovery in the short-term and how do we make sure that we're also exploiting all cost reduction activities. And to be honest, we're not turning our focus to anything other than those for the next number of years.

Our next question comes from Sam Seow from Citi.

Just a quick one on Cans. The implied second half '25 volume growth looks to be quite strong, maybe in double digits. Just keen to understand if you can grow off that in second half '26 or anything we need to know about the one-offs or the first half, second half weighting in FY '26?

Thanks. Well, we certainly were -- we were a bit constrained. We were waiting for Revesby to come online. So that helped. And as you -- most of you will recall, we only had a 1% growth rate in the first half and a few people worried that was going to continue. What we do see is some variability in that demand over time, over halves and over years. We still stick with that sort of 4% to 6% medium- to long-term growth projection. So landing at the 6% was probably a bit above where we expected. A little bit of that was some inventory build as customers commissioned new filling capacity. So we had some ramp-up involved in that. So that was probably where we take a point off that. So when we look at FY '26, we're still very comfortable we can get volume growth, but it will probably be closer to the low end of our long-term range rather than the top end.

That's helpful. And then just on the bad debt that you had in that business, does that reverse? Or are they just completely lost earnings?

No, it's a bad debt. I mean there's still -- like all of these things, there's always a long legal process to try and get something back, but that's what we expect the loss to be.

Okay. And then just quickly on Saverglass, if I can. The 21% orders seems quite positive. Can you just give us a feel what was like-for-like versus you actively winning share? I mean it feels like you're gaining a lot of share in a soft market, but just kind of want to unpack that, please.

Yes. Look, underlying volume was fairly flat. So we -- the order book being up, there's always the noise in that relative to the lag of when you get an order versus when you ship it to the customer. So it's not something we take as true demand is up 21% necessarily until we see that all flush through. But the real numbers are what the customers took, which was at 9% up half-on-half. The majority of that was in the wine and champagne segment where we've been actively chasing some volume. So I'd say our core underlying business was reasonably flat, maybe a little bit up, and the rest of it was new business for us, which is why we're seeing that mix shift because it's not -- we're not seeing growth in the wine industry, for example, because that would be counter to what seeing globally, but we're growing in wine relative to market share.

Our next question comes from Brook Campbell-Crawford from Barrenjoey.

First one, just on Saverglass tariffs. Do you mind providing an update on how much impact you think will come through in FY '26 because of the tariffs at the EBIT level would be great if you are expecting an impact at all?

Well, at this point, it's very hot off the press, the 15% out of Europe. I think as I said, about just under 30% of what we believe our customers produce goes into the U.S. So there is a fair chunk that's subject to those tariffs. We're yet to get any real feedback from our customers. And this time of year, a lot of the European organizations and people are on vacation in August. So things are relatively quiet in terms of information flow. So we have not baked into what we've said any assessment of a major negative. We're certainly not baking on a rebound. So our outlook is based on fairly steady underlying demand that will need to be managed through between all parties relative to that tariff and us continuing to pursue some opportunities to grow some volume at our instigation rather than underlying demand. So no real assessment on EBIT impact at this point, Brook.

Understandable. And just the good news story about you being able to win share in wine and champagne. Do you mind just providing a bit more color on this? How broad-based is it? Is it quite concentrated in terms of a customer or 2? And is it anything you can help us understand and appreciate how sustainable it is? I guess, I would have thought in that lower-priced market, and it's hard to sort of stand out and differentiate other than price, but maybe I'm wrong there. So any color just to help us understand how sustainable the step-up in share is?

Yes. And this is not commodity wine. This is the premium part of the wine segment that Saverglass did participate in sort of pre-2021 time frame when demand started to increase with COVID. So they were a supplier and a reasonable volume supplier across quite a number of European wine producers at that premium end. They pulled back from that when the spirits market really boomed because they were utilizing all the capacity that was available for the premium spirits because they actually were at a higher margin. So a lot of the growth we're now seeing is really going back to our customer base that was a pre-existing customer base that we couldn't fulfill, but in that premium segment. So prices are lower than spirits, but this is not commodity end product that we would see the mainstream glass manufacturers fighting for.

Our next question comes from Cameron McDonald from E&P.

Just a question going back to the Cans division, if I can. So you've said basically 9% revenue growth, excluding the pass through of aluminum, and then excluding the sort of the one off elements relating to the corporate cost increase and the bad debts, you're saying that the EBIT increased 7%. Why aren't we seeing any operating leverage yet out of that business, please?

Really, really good question, Cameron. In effect, the demand that we've really seen is in Queensland, and we haven't yet commissioned the Queensland facility. So we're supporting that demand from Sydney and from Melbourne. Therefore, we've got really high freight costs for pushing that around. That freight will unwind as we bring online the new Rocklea facility, and then we would expect to get that operating leverage back.

Okay. So -- but doesn't that then mean that you'll have excess capacity in Sydney and Victoria that the demand isn't as strong in those regions?

No, we're growing at sort of 4% to 6% over the long period consistently across the whole of the country. The customers that we've got in Queensland are putting in new filling capacity in Queensland, and we're having to support that from the Eastern Seaboard. We're making the Rocklea investment to be able to support and align to their investments.