Hello, welcome to the Orora FY 2023 results call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will hear an automated message advising that your hand has been raised. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Orora's CEO, Mr. Brian Lowe.
Thank you, Operator. Good morning to everybody, and thank you for joining us today for the Orora Group FY 23 results presentation. I'm joined by Shaun Hughes, our Chief Financial Officer. Today I'm pleased to provide you with an overview of our results for the financial year 2023, an update on our safety performance, the continued progress that we've made against our strategic priorities, the great milestones that we've reached in our cans expansion investments, including the new and very exciting first to market high-speed digital printing solution for FY 2025. A reminder of Orora's compelling investment proposition, and how it's underpinned by our strategic advantage and core value proposition as a design-led, leading sustainable packaging solutions provider.
I'll hand you over to Shaun, who will take you through the group and business unit financial results in more detail before I conclude with an update on sustainability and our FY 2024 perspectives and outlook. At the end of the presentation, Shaun and I, as always, will be happy to take your questions. Before we start, please take note of the important information on slide 2. I'll now turn to slide 4 and our FY 2023 financial highlights. I'm pleased to report the continued disciplined execution of our strategy has resulted in another solid increase in group earnings and underlying EPS. The increase in earnings was driven by double-digit earnings growth in OPS North America, and another resilient earnings performance by our beverage business in Australasia. This was achieved as we navigated ongoing market pressures.
Importantly, the Australasian business returned to earnings growth in the second half of 2023. Underlying group EBIT increased 12.3% on a reported basis, driven by a significant increase in North American earnings, up 23.9%. Underlying NPAT was up 8.5% to AUD 203 million, while underlying EPS increased 11.1% to AUD 0.241 per share. Cash generation remains strong, with underlying operating cash flow in line with the prior year at AUD 269.9 million, and cash conversion of 70.2%. CapEx of AUD 193.8 million was significantly higher, as planned, as the group invest in cans-related CapEx to support future Australasian earnings growth.
RoACE of 21.8%, slightly down on the prior period, reflecting higher Australasian working capital, partially offset by the increase in North American earnings. The Board has declared a final ordinary dividend of AUD 0.09 per share, unfranked, and 100% sourced from the Conduit Foreign Income Account. This brings the total dividend declared for FY 2023 to AUD 0.175 per share, a 6.1% increase on FY 2022, and representing a total dividend payout ratio of 72.6%. I'll now turn to slide 5. Our FY 2023 results again demonstrates the continued execution of our strategy, strategic priorities, and embedded pricing disciplines in what has been a year of challenging global economic conditions.
In North America, we delivered another strong earnings result, with EBIT up 15% on a local currency basis and 23.9% on a reported basis. This was driven primarily by the OPS distribution business, particularly in Mexico and the Eastern United States, and reflects the continued improvements in operating efficiency and cost to serve, while ensuring strong pricing disciplines to manage inflation. The decline in revenue reflects the broader North American manufacturing industry, with volume softness and the flow-through impacts of paper price deflation being partially offset by some price increases within distribution. The OPS manufacturing business has seen 12 months of lower volumes, with cost management initiatives proactively deployed to partially reduce the earnings decline.
The Orora Visual operations were aligned under OPS during FY 2023. Pleasingly, this, along with the execution of business improvement programs, has delivered both earnings growth and now delivering a mid-single-digit EBIT margin. The benefits of our sustained and disciplined approach to operating efficiency and tight management of inflationary pressures increased the North American segment EBIT margin by 90 basis points to 5.1%, with OPS now at 5.9%. Turning to Australasia. Revenue was up 14.1%, driven by 2.7% net volume growth, 3.5% relating to higher aluminum costs, which are passed through to customers, and 7.9% of price increases and a positive product mix. Australasian EBIT was in line with expectations, up 1.8% to AUD 153.3 million.
This underscores the resilience of the beverage business, with strong consumer demand for cans offsetting softness in our glass business. Our cans business grew sales volumes by approximately 10%, driven by growth across all formats, with the business delivering impressive five-year compound annual growth rate of 6.5%. Additionally, product mix improved, underpinned by growing demand in carbonated soft drinks, craft beer, and energy drinks, and a preference shift towards cans. Pleasingly, revenue and earnings from new glass products, including the carbonated water, spirits, and olive oil markets, were all higher than the prior period. EBIT margin for Australasia was 14.8%, reflecting the dilutionary impact of higher aluminum prices. I'll now turn to Slide 6, and safety performance.
While lost time injury rate remained relatively stable year-on-year, we experienced a disappointing increase in the frequency of largely preventable, low-severity injuries in FY 2023. One serious injury was also regrettably recorded at our glass facility. An extensive risk assessment had been completed, and has been completed, and proactive controls are now implemented to prevent any future occurrence. I'm pleased to report the employee concerned has since returned to work. In FY 2023, the key initiatives around safety that were implemented include: the development and implementation of high-risk safety procedures, the identification and communication of ten high-risk activities that have the potential to cause serious injury, and how we should manage those, intensifying our focus on health and safety culture through leaders communication and safety leadership tours.
There's no doubt for us, the health, safety, and well-being of our people is paramount and remains a fundamental and ongoing commitment at Orora. I'll now turn to Slide 7. Orora continues to deliver strong revenue and earnings growth for shareholders, this is clearly shown in the graphs on this slide, which highlight our performance on key measures post the sale of our fiber business. Since FY 20, both underlying EBIT and underlying EPS have delivered a compound annual growth rate of 12.6% and 22.2%, respectively. Over the same period, we've grown revenue to almost AUD 4.3 billion and delivered strong growth in ordinary dividends. Turning now to Slide 8. This slide sets out the compelling investment proposition Orora continues to provide investors, with a robust and defensive earnings profile and attractive growth upside.
Importantly, the business has delivered year-on-year earnings growth and strong shareholder returns following the divestment of the fiber business, which is attributable to our robust and diversified business model, our well-invested assets, and long-term customer trading relationships, and our disciplined approach to capital allocation, with growth CapEx, underpinning our future earnings growth. These attributes have positioned Orora with a robust platform for further organic and inorganic growth in existing and potential new markets. Turning to Slide 9. Orora's compelling investment proposition is underpinned by a strategic advantage and core value proposition as a design-led, leading sustainable packaging solutions provider. Specifically, our attractive market positions in North America with our OPS business and our beverage business in Australasia, with embedded and long-standing customer relationships, differentiated value proposition, a privileged and well-invested asset positions, and growth opportunities to expand our footprint and product capabilities.
These are why we've continued to deliver strong earnings growth for our shareholders. Turning to Slide 10. Our strategic pillars, underpinned by our reliable cash flow-generating assets, remain unchanged. They continue to guide our actions, support the delivery of our achievements in FY 2023, and will continue to guide us over the coming years. In North America, OPS has driven further improvements in financial performance and operating discipline, which is reflected in the EBIT margin accretion and double-digit earnings growth. With pricing disciplines now firmly embedded, the OPS business is investing to drive long-term volume growth, with 40 new sales resources recruited in FY 2023. In our beverage business in Australasia, operating excellence, automation, lean manufacturing programs, have embedded productivity gains that delivered strong volume growth in cans. Our cans growth investments are also well advanced, and I'll cover these on a future slide.
In glass, capacity continues to be deployed to new categories, while the commissioning of the glass beneficiation plant was a key deliverable against our sustainability commitments. Looking more closely at our FY 2024 priorities, OPS will continue to optimize the business and position for growth by maintaining the strong momentum in proactively managing customer account profitability and leveraging digital platform investments to streamline processes. Investment in the OPS sales force to drive long-term volume and earnings growth remains a focus, with the business targeting a further 50 new sales resources in FY 2024. We also continue to actively assess OPS's manufacturing footprint and growth opportunities in North America, as we seek to expand our product and service offerings, including sustainability-related offerings. For the beverage business, the additional capacity following installation of the second canning line at Dandenong, enables the business to drive growth in cans volume and optimize production.
Construction of the second canning line at Revesby is progressing well and is anticipated to support sales growth in the second half of FY 2025. Product mix will continue to be optimized in glass as the business diversifies its portfolio, and the cans business will benefit from an ongoing preference shift from glass and plastics to can formats. We also continue to explore potential opportunities to expand the beverage business in attractive offshore markets. Across both OPS and beverage, our attention is firmly focused on sustaining the momentum and continuing the disciplined execution of our strategic priorities. Turning now to slide 11. We've reached an exciting milestone in stages 1 and 2 of our beverage cans capacity expansion, comprising the can ends capacity increase at Ballarat and a new multi-size canning line at Dandenong, and which is now in place with earnings to flow from FY 2024.
Our cans business was at capacity, and whilst it's been able to deliver a sales CAGR of 6.5% since FY 2018, through continued operational excellence and moving to 24/7 operations, further growth would have been constrained without these investments. The committed AUD 195 million investments to increase capacity and capabilities for our cans business, reflects a strong customer-led outlook for cans volume growth, and importantly, is underpinned by long-term customer contracts. Stage 3 of our investment in capacity expansion is a second multi-size canning line at Revesby, which is scheduled to be commissioned in the second half of 2025, adding a further 10% network capacity. Collectively, these cans growth investments will contribute approximately AUD 30 million of growth-related earnings once they're fully utilized by FY 2028. Now, turning to slide 12. Orora continues to innovate and invest in market-leading technologies.
In July, we launched a first-to-market, high-speed digital printing technology for the cans business, known as Helio by Orora, signifying a step change in Orora's leadership in can decoration. Helio offers our cans customers and their brands, the ultimate combination of high-speed digital printing and customized direct-to-shape printing, design, and decoration. The technology enhances our customer offering and is ideal for new products and promotional applications by providing greater flexibility through differentiated levels of design and decoration, and the ability to offer smaller print runs at significantly reduced turnaround times. This AUD 14 million investment complements our traditional high-speed offset decorating process and capitalizes on the current investments in cans expansion.
The first high-speed digital printer will be installed at our Dandenong site in the second half of 2024, and will have a capacity to deliver up to 100 million units per annum, with an initial capacity of 35 million units in the first year as we ramp up production. Our investments in cans capacity expansion and innovative technology illustrates why Orora is the market-leading manufacturer and expert in design and decoration of cans in Australasia. I'll now hand you over to Shaun, and he'll discuss the group and segment financial details.
Thanks, Brian, and good morning, everyone. I'll start with the group results before I cover the segment financial performance. I'm at slide 14, and this summarizes the group's underlying and statutory earnings results for FY 2023. At a group level, revenue of $4.3 billion was up 4.9% on a reported basis. Revenue growth was driven by a 14.1% increase in Australasia, largely reflecting the impact of higher aluminum prices passed through to customers, continued strength in cans volumes, and a 2.3% increase in reported North American revenue. On a constant currency basis, group revenue was slightly down on FY 2022, with North American revenue down 5.1% due to a decline in line with the broader manufacturing industry activity levels.
Group underlying EBIT was up 12.3% on a reported basis or 7.7% on a constant currency basis. This was driven by continued double-digit growth in North American earnings, up 23.9% on a reported basis or 15% on a local currency basis. Underlying NPAT and EPS were both up strongly for the year, with NPAT increasing 8.5% and EPS 11.1%. This reflects the strong earnings growth in North America and a resilient earnings performance in Australasia, partially offset by higher finance costs attributable to the increase in gross debt from growth CapEx investments, recent on-market share buybacks, and higher base interest rates. On a statutory basis, NPAT was down 1.2% and basic EPS was up 1%.
This includes the impact of a significant item of AUD 18.2 million after tax, relating to the decommissioning activities for the former Petrie site. Unprecedented rainfall levels in Queensland in FY 2023 and unforeseen complexities in the final stages of work, have resulted in delays, with an additional provision recognized in respect of the estimated costs to complete. Moving now to the North American business on Slide 15. The North American businesses have again delivered strong earnings growth, driven by OPS distribution, which achieved further improvements in account profitability and operating efficiencies, whilst actively managing costs in a challenging economic environment. In local currency terms, revenue was down 5.1%, and EBIT increased an impressive 15% to $112.6 million.
The decline in revenue reflects softer U.S. economic conditions and is primarily due to manufacturing, which has now seen 12 months of lower volumes. Volume softness in the second half of 2023, partially offset by price, saw distribution revenue also decline. Pleasingly, the business achieved further margin accretion, with EBIT margin increasing 90 basis points to 5.1%, driven primarily by OPS margin accretion, which increased to 5.9%. North American operating cash flow increased 33% to $112.5 million, reflecting strong cash EBITDA and a positive movement in working capital. Cash conversion was strong at 89%, primarily reflecting cash EBITDA. RoACE of 21.7% was up 140 basis points and is driven by the increase in North American earnings. Turning to Slide 16.
The Australasian Beverage business exceeded AUD 1 billion in revenue for the first time, with sales revenue up 14.1%. The growth in revenue was driven by 2.7% net volume growth, in addition to 3.5% higher aluminum costs passed through to customers and 7.9% through price increases and improvements in product mix. Underlying EBIT of AUD 153 million, was in line with our expectations, up 1.8% on the prior year. Importantly, the business returned to growth in the second half of 2023, growing underlying EBIT 8.5%, primarily from cost inflation recoveries.
This is another robust earnings performance and demonstrates the diversified strength and resilience of the Australasian business during a period where volume gains and product mix improvements in cans were offset by a slowdown in domestic and export consumer demand for Australian commercial wine and beer. Underlying operating cash flow of AUD 102.7 million was lower than the prior year, reflecting an increase in working capital and AUD 13 million of base CapEx related to the G3 furnace. The increase in working capital is primarily due to higher glass inventory to support the G3 furnace rebuild, partially offset by depletion of cans finished goods. Excluding the CapEx related to G3 furnace, Australasian cash conversion was 53.7%, reflecting this higher glass inventory. RoACE is a solid 21.8%, reflecting the higher working capital and CapEx investments commissioned during the year.
In FY 2023, AUD 163 million of CapEx was invested in the beverage business, with growth CapEx of AUD 139.6 million. Turning to Slide 17. Underlying operating cash flow of AUD 270 million was broadly in line with the prior year. The group's continued strong cash generation reflects the increase in cash EBITDA, up 8.6% or AUD 32 million to AUD 402.9 million, partially offset by an increase in working capital and base CapEx. The movement in working capital of AUD 84.8 million was up AUD 22 million on the prior year and is largely attributable to Australasia, with higher glass inventory partially offset by the cans finished goods depletion. The group invested AUD 194 million in base and growth CapEx.
This was primarily driven by additional growth CapEx of AUD 145 million, relating to the new Dandenong cans line, ends capacity expansion at Ballarat, the cullet beneficiation plant, and the oxygen plant for the G3 furnace. Tax payments of AUD 40 million are lower than the prior year due to the timing of FY 2022 payments and the instant asset tax write-off benefits in Australia. Cash conversion, excluding the AUD 13 million for the G3 furnace, remains strong at 70.2%. Turning to Slide 18. The group is partway through a multi-year CapEx program to drive earnings growth and sustainability initiatives. A number of key projects were delivered in FY 2023, including the cullet beneficiation plant, ends capacity expansion at Ballarat, and with the second canning line at Dandenong now operational, incremental earnings will flow in FY 2024.
The table on this slide summarizes the current key projects in our CapEx program, a combination of base, growth, and sustainability investments. CapEx spend in FY 2024 will total AUD 250 million, including AUD 160 million of growth CapEx. Our growth CapEx investments are expected to generate a minimum 15% return once fully utilized, with the exception of the oxygen plant, which is expected to meet WACC. The cans growth investments will contribute AUD 30 million of growth-related earnings once they are fully utilized by FY 2028. Slide 19 highlights Orora's strong balance sheet and the net debt position, which continues to provide operating and strategic flexibility to support our growth strategy. At 30 June, net debt increased to AUD 774 million, with leverage at 2.0 times net debt to EBITDA.
Leverage increased 0.2x from FY 2022, driven by these capital investments, AUD 193.8 million. Investment in working capital, predominantly from glass finished goods ahead of the G3 rebuild, interest payments of AUD 37 million, and Australian dollar movements in US dollar debt, partially offset by stronger earnings. The investment in growth CapEx will drive short-term increase in leverage before associated earnings start to flow from FY 2024. The company maintains a strong liquidity position with committed undrawn debt capacity of approximately AUD 500 million, including AUD 100 million used to repay the USPP notes, which matured in July, and cash reserves of over AUD 58 million, as at the 30th of June 2023.
During FY 2023, the group amended and extended a number of debt facilities and also put in place new medium-term debt facilities to fund ongoing CapEx projects and to repay maturing debt facilities. The average tenor of the group's facilities is now 2.3 years. Our approach to capital will continue to be balanced and disciplined, and we remain committed to maintaining sensible debt levels and investment-grade credit metrics with our target leverage range between 2 and 2.5 times net debt to EBITDA, as we continue to pursue organic and inorganic investments. Turning to Slide 20, the board has declared a final unfranked ordinary dividend of AUD 0.09 per share. This takes the total FY 2023 dividend declared to AUD 0.175 per share, a 6.1% increase on FY 2022, and represents a dividend payout ratio of 72.6%.
The dividend reinvestment plan will be operative for this dividend, with shares purchased on market to meet our obligations. Given the group's near-term capital investment programs, the tax effects of Australia's instant asset write-off legislation, and other timing differences, the group does not expect to frank future dividends until after FY 2024. I'll now hand back to Brian.
Thanks, Shaun. Now turning to sustainability and our promise to the future on Slide 22. In FY 2023, we continued to make good progress on our sustainability goals under the pillars of circular economy, climate change, and community. Orora is a proven leader in circular economy initiatives as we seek to maximize the recycled content of our manufactured products. This year, there was an average of 38% recycled content in our manufactured glass products. This was in line with FY 2022. However, pleasingly, more than 30,000 tons of new cullet sources were developed during FY 2023, as we target 60% recycled content in our glass packaging by 2025. Orora's aluminum cans business achieved 57% recycled content in line with FY 2022. In North America, we averaged 57% recycled content in the manufacture of corrugated board, up from 54% in FY 2022.
As part of our climate change commitment, we have signed a new foundational solar farm PPA with Epic Energy for 100% offtakes of the newly constructed Mannum Solar Farm in South Australia. This pro- will provide 35 megawatts of solar-generated electricity to our South Australian facilities from FY 2024. Since 2019, we have reduced our Scope 1 and Scope 2 greenhouse gas emissions by 12.9% using location-based factors for Scope 2, and by 4.8% using market-based factors for Scope 2. We are committed to net zero for Scope 1 and Scope 2 emissions by 2050, with a 40% reduction by 2035. Our commitment to an Australian-first oxy-fuel furnace for our Gawler G3 furnace will reduce emissions by approximately 20%.
Along with our executive leadership team, I am extremely proud of the great work being done in this very important area. Turning now to Slide 24, I'll cover the perspectives for FY 2024. In North America, inflationary pressures are stabilizing and prices are declining in some commodities. We are confident that our embedded pricing disciplines will facilitate market price adjustments as required. Distribution volumes are expected to be impacted by softer trading conditions across most regions. However, the business remains well-positioned to drive earnings growth through embedded pricing disciplines and from any improvement in the US economy. Manufacturing has seen 12 months of lower volumes. We do expect the business to be impacted by ongoing softness in the US economy and the pass-through impacts of lower paper prices.
Finally, the North American management team will continue to invest in additional sales resources to drive long-term volume growth. In Australasia, the beverage cans business is expected to deliver further growth, driven by the increased sales volumes from the new Dandenong multi-size canning line and product mix optimization. In relation to glass, we expect continued softness in customer demand for Australian commercial wine for both export and domestic sales. Energy, energy market volatility continues to be well managed, with approximately 70% of electricity costs covered by PPAs and fixed retail contracts, and almost 100% of gas costs contracted through the end of calendar year 2025. We'll continue to identify and implement cost reduction initiatives, invest in asset upgrades, and build out the new capacity. In respect to cash flow and CapEx, we are committed to the ongoing investment in our existing businesses.
Growth CapEx will continue in Australasia, with construction of a second canning line at Revesby and installation of the cans' high-speed digital printer at Dandenong. In glass, preparation will continue for the G3 furnace rebuild. Construction will progress for the oxygen plant at Gawler. We continue to target group cash conversion above 70%, excluding the G3 furnace rebuild. In respect to capital management, the dividend payout ratio is 60%-80% of NPAT, and we continue to actively assess opportunities to expand our North American footprint, as well as assess potential opportunities to expand our beverage footprint in attractive offshore markets. Now turning to Slide 25 and our outlook. Whilst global economic conditions remain uncertain, the Orora Group earnings are expected to be higher in FY 2024.
In North America, further margin accretion through account profitability programs and continued focus on cost management is expected to be largely offset by ongoing volume softness. In Australasia, the continued strength in cans, with incremental volume growth from recent investments, is expected to offset the ongoing softness in glass from lower commercial wine volumes. This outlook remains subject to global and domestic economic conditions and currency fluctuations. Thank you all for listening.