Morning, everyone, and thank you for joining us here this morning. A special thanks to Janelle and our marketing team to putting that video together, just a short appreciation of the products we make around the globe. My name is Rob Sindel, and I am Chair of Orora Limited, and I will chair the meeting today. On behalf of the board, I am pleased to welcome you to Orora's 13th annual general meeting. We are holding today's meeting in a hybrid format, so welcome to those joining us online and those attending here in person in Richmond. Before we begin, please switch mobile phones to silent. I will also ask that no photographs or recordings be taken during the meeting. A recording of the presentation will be available on Orora's website shortly. As we have a quorum, I now declare the AGM open.
A notice of meeting has been distributed to shareholders, and I will take the notice as read. In attendance today, on my right, we have Susannah Joblin-Hodgson, our new Company Secretary and Chief Legal Officer. Brian Lowe, Orora's Managing Director and Chief Executive Officer. My fellow directors in the room are Sarah Hofman, Michael Fraser, and Jackie McArthur. Joining us on the screen from overseas are Claude-Alain Tardy, who is in Paris at half past one in the morning, and Tom Gorman, joining us from the east coast of the United States. Sarah will stand for re-election today. We also have our company auditors, Penny Stragalinos, a Partner from KPMG, here with us. Welcome, Penny. Penny will always be available to answer questions on behalf of the auditors. Members of the Orora leadership team are also here.
Angela Di Iorio, Chief People Officer, Ann Stubbings, our outgoing Company Secretary, and our incoming CFO, Paul Victor, who are commencing the role shortly. Put your hand up, Paul. Before we move to the formal items of business, I will briefly reflect on the board and management's accountability for our FY 2026 performance, our strategic priorities and sustainability progress, as well as the board's response to shareholder feedback on remuneration. Brian Lowe will then provide details on safety and sustainability, as well as the performance of our cans and glass businesses. The board fully recognizes that accountability is fundamental to its responsibility as stewards of shareholder capital. We understand that many shareholders are disappointed by recent outcomes, including the decline in share price, the challenges associated with the Saverglass acquisition, and the subsequent impairment.
Since the acquisition, the business has also operated in a more uncertain global environment, including geopolitical conflict, trade and tariff disruptions, and a distinct weakness in consumer demand. These conditions have clearly influenced performance. However, they do not alter the board and management's responsibility for the outcomes delivered. Shareholders are entitled to hold directors to account through the AGM voting process. The board respects that right and accepts the shareholders must be earned through improved performance, disciplined execution, and the creation of long-term value.
FY 2026 was characterized by very different market conditions across our cans and glass business. In reflecting on our financial results, there are a number of points I would like to share. Prudently, we maintained a strong balance sheet and solid cash generation, supporting shareholder distributions and the recommencement of our on-market buyback. Approximately 56 million shares were bought back in FY 2026 for a total of AUD 118 million.
The cans business delivered another strong performance. This was supported by the capacity expansion program and the continued shift in consumer preferences towards cans, as well as growth in new beverage categories. Our glass business continued to operate in difficult market conditions. While Saverglass delivered volume growth and market share gains, earnings were impacted by price and mix, with a category shift towards lower average selling prices and lower margin products. Gawler continued to face softer volumes in both beer and wine. However, a transition from our three-furnace operation to a two-furnace operation is delivering ongoing efficiency benefits. The glass business is now focused on executing a set of initiatives targeting more than EUR 30 million of EBIT improvement by FY 2030. This plan is supported by six clear priorities, which Brian will talk to you shortly.
As part of the FY 2026 result, Orora recognized a EUR 450 million non-cash impairment of the glass business. This reflects the impacts of the ongoing Middle East conflict, the U.S. tariffs and cost of living pressures across key markets. Having reassessed our ongoing consumer demand and Saverglass earnings, the board acknowledges that the performance and valuation of the glass business have not met expectations we held at acquisition. The board continues to monitor management's actions to improve performance, maintain disciplined capital allocation, and support long-term value creation. Importantly, the impairment is non-cash and does not impact on the group's liquidity or free cash flow available to shareholders in FY 2027. During FY 2026, Orora continued to make good progress against its sustainability goals, including improvements in recycled content and further reductions in carbon emissions.
The past financial year also marked Orora's first year of reporting climate-related disclosures, which were prepared in accordance with the Australian Sustainability Reporting Standard. These developments reflect the board's focus on transparency, governance, and long-term climate-related resilience. I'll get Brian to discuss a number of these operating initiatives when he gets up to speak. Good corporate governance is integral to Orora's culture and business performance. It supports sound decision-making, effective oversight, and an appropriate balance between risk and return. The board devotes significant attention to the matters most closely connected to long-term shareholder value, including strategy, capital allocation, financial performance, safety, and sustainability. This includes close oversight of the glass strategic plan, the returns expected from our recent investment in cans, and our response to an increasing complex geopolitical and regulatory environment.
The board also makes several site visits to meet with management and visit our operations, including the new can line in Rocklea in Queensland, the RAK facility in the U.A.E., and the Saverglass facility in California. Before we move to the procedural part of the meeting, I wanted to address the remuneration report directly. At the 2025 AGM, many shareholders voted against our remuneration report. The board was disappointed with this outcome, however, recognized the concerns that shareholders expressed. The board has listened carefully. Directors and management engaged with shareholders and proxy advisors, and the FY 2026 remuneration report provides enhanced disclosures of performance targets, clear expectations of the governance and application of discretion, and further details on the adjustments to long-term incentive plans. Remuneration outcomes for FY 2026 also demonstrated the board's focus on shareholder alignment and management accountability.
The board determined that no short-term incentive payment will be made to key management personnel. The FY 2024 long-term incentive grant also did not vest because performance hurdles were not met. For FY 2027, key management personnel did not receive an increase in fixed pay. The board believes these decisions appropriately reflect the experience the shareholders have felt as a result of the company's performance. We will continue to engage openly and ensure remuneration supports disciplined execution and, as I said, long-term value creation. I thank our shareholders for their continued support and also the constructive feedback. I would now like to take a few moments to acknowledge the contribution of Ann Stubbings, who advised us during the year she intended to step down from Orora. Ann was one of the original members of the leadership team that established Orora as a separate ASX listed company in 2013.
She has been a tremendous leader at Orora as well as a huge support to the board. I know I speak for the rest of the board when I say she will be greatly missed. I would also like to thank Brian, the Orora leadership team, and all our team members around the globe for what has been a commitment throughout what has been a challenging year. Their ongoing focus on safety, customers, operational and financial performance is fundamental to the progress we must deliver. Thank you, shareholders. I will now hand over to Brian.
Thank you, Rob, and good morning to everybody. Appreciate you joining us today and your continued support for Orora. As Rob outlined, across FY 2026, our management maintained focus on disciplined execution and the actions required to improve performance and deliver returns to shareholders. I will expand on these themes today, covering safety and sustainability performance, as well as our operational performance in cans and glass and our FY 2027 outlook. Before turning to our safety performance, I want to acknowledge the vehicle-related incident at our Acatlán site in Mexico on the 15th of July, which tragically resulted in the death of a contractor. On behalf of Orora, we continue to extend our deepest sympathies and support to the contractor's family, colleagues, and those affected by the incident. A full investigation commenced following this incident.
As we continue to support those affected, several corrective actions and preventative actions have also been taken, not only across Acatlán, but across all Orora sites. As the incident occurred after the year-end, it will be reported as part of the FY 2027 safety performance. During FY 2026, while recordable injuries were broadly stable year-on-year, our recordable case frequency rate increased to 10.5, and this was due to lower hours worked in light of reduced production volumes across our glass network.
Lost time injury frequency rate increased to 5.7, which primarily reflects lower severity sprains and lacerations at our European glass facilities. In the period, we commenced our FY 2026 to FY 2028 Global Health and Safety Strategy, strengthening governance, risk management, and leadership across our operations. In FY 2027, our focus is to turn this work into stronger, more consistent performance at every site with clear accountability for our leaders and teams.
Pleasingly, we made solid progress across our sustainability program in the financial year, known as Our Promise to the Future. Under circular economy, we increased recycled content in colored glass from 44%- 65%, reflecting positive color sourcing programs. In cans, we achieved 77% recycled content, a solid result given the aluminum sourcing constraints caused by the Middle East conflict. Under climate change, we further reduced Scope 1 and Scope 2 greenhouse gas emissions. For the first time, we also reported progress on Scope 3 emissions. For FY 2026, this represents our first year of reporting for climate related disclosures, prepared in accordance with Australian Sustainability Reporting Standard AASB S2. Under our community pillar, along with our focus on safety, we continue to invest in our people and communities. Our FY 2026 global engagement survey achieved an engagement score of 73%, slightly above manufacturing benchmarks.
Female representation increased to 25%, up 2 percentage points on FY 2025, and our first Women in Leadership at Orora program in France was successfully completed. You can find further details on progress across our sustainability agenda in our company's 2026 annual report. Now looking at our financial highlights. EBITDA was broadly flat at AUD 420 million. This reflects growth in cans and Gawler being largely offset by lower Saverglass earnings. EBIT was AUD 248 million, down AUD 14 million or 5%, with higher D&A also impacting the result. Underlying NPAT was AUD 142 million, down AUD 9 million or 6%. Underlying earnings per share was flat at AUD 0.114 per share, reflecting the benefit of the on-market buyback programs. Operating cash flow remained strong at AUD 291 million, with cash realization of 98%. Looking more closely at our operational progress.
Our cans business delivered another strong result, with volumes up 6.3%, supported by customer demand and the continued shift towards aluminum packaging. Revenue increased 13.3% to AUD 880 million, while EBITDA increased 10.5% to AUD 131.2 million, with EBIT increasing 7.3% to AUD 111.4 million. Growth was particularly strong across energy drinks, carbonated soft drinks, and alternate beverages, with beer also delivering volume growth. This performance reflects the investments we've made to expand capacity in support of our customers. The second line at Revesby supported increased demand for multi-sized cans, while the third production line in Rocklea completes our major capacity expansion program and is expected to deliver approximately 13% additional network capacity over time. With the expanded capacity in place, our focus moves from construction and commissioning to execution. Ramping up production, improving utilization, and converting investment into earnings and cash generation.
The expansion delivered approximately AUD 21.7 million in annual EBIT benefits by the end of FY 2026, and remains on track to deliver more than AUD 50 million in annual EBIT benefits by FY 2030. For our glass business, which applies as a Saverglass and Gawler, the external environment continues to be challenging. The global wine and spirit markets remain subdued, with cost of living pressures affecting consumer demand and the U.S. tariffs and Middle East conflict creating further challenges. Saverglass volumes were, however, up 5.9%, including growth of 9% in the second half. However, that growth was weighted towards lower priced products, which affected average selling prices and margins. Revenue was up 0.8 of a percent, whilst EBIT was down EUR 16.4 million, reflecting these price impacts.
During the year, we closed the F4 furnace at Le Havre in France, continued to rebuild and modernize our facility in Ghlin, in Belgium, and paused production at RAK, the facility in the U.A.E., following the closure of shipping routes related to the geopolitical conflict in that region. Following the suspension of production, the site transitioned to an idle closed loop mode. Pleasingly, as planned, we recommenced production at the RAK facility on a restricted volume basis from early October via alternate shipping routes through the port of Oman. Until the Strait of Hormuz fully reopens, our intention is for RAK to operate at approximately 50% capacity using those shipping ports in Oman. The partial restart of RAK allows us to better service our global customers. This, of course, remains subject to operating conditions in the region and the safety of our people.
For Gawler, revenue was broadly flat at AUD 285 million, reflecting a continued decline in beer volumes, with contracted price increases almost offsetting a 2.1% decline in volumes. EBIT increased 11% to AUD 28 million, reflecting the efficiency benefits of the successful move from a three-furnace to a two-furnace operation. As Rob noted, the FY 2026 results for glass were below our expectations. We are taking clear action to improve performance. The glass business is focused on six clear priorities to drive growth, improve margins, and optimize cash generation. These priorities are accelerating new business, bringing products to market faster, improving pricing and product profitability, increasing operational and procurement efficiency, reducing overhead costs, and improving inventory and cash management. Together, these initiatives target more than EUR 30 million of net EBIT run rate improvement by FY 2030.
Saverglass maintains strong customer relationships, differentiated design and technical capabilities, and leading positions in premium glass packaging. Our focus remains on turning those strengths into improved profitability, cash generation, and returns. Before handing back to Rob, I will reiterate our FY 2027 outlook and provide an update on first quarter trading. For cans, EBIT is expected to be higher than FY 2026. Volume growth is expected to be consistent with the long-term growth rates of 4%-6%, supporting EBITDA growth in FY 2027. This will be partially offset by higher D&A, including the commissioning of Rocklea by the end of the first quarter of FY 2027. For Saverglass, ongoing impacts from U.S. tariffs, the accelerated effects of the Middle East conflict, and continued supply chain disruptions resulted in adverse price and mix effects in the second half of 2026.
These pressures have continued into FY 2027, with volume growth and cost savings more than offset by ongoing pricing and mix impacts. Consequently, FY 2027 EBIT is expected to be below FY 2026, with both volume and earnings weighted to the second half. This reflects the progressive delivery of the glass business priorities, which are expected to contribute to the targeted EUR 30 million of run rate EBIT improvement by FY 2030. Management remains focused on executing these priorities and expects benefits to build progressively as the initiatives are realized. Q1 FY 2027 volumes were modestly below the prior corresponding period and support our second half weighted earnings profile. For Gawler, EBIT is expected to be around AUD 30 million for FY 2027, and it will be the first full year of a two-furnace operation. Operational benefits are expected to support EBITDA growth versus FY 2026.
At a group level, EBIT is expected to be lower than FY 2026, reflecting higher D&A and lower Saverglass EBIT. In relation to significant items for FY 2027, cash costs from the FY 2026 significant items will be approximately EUR 8.5 million. In relation to RAK for FY 2027, the monthly idling cost is approximately EUR 2 million per month. This is prior to the recommencement in October on a volume restricted basis. This monthly idling cost will reduce as RAK production increases above 50%. The outlook remains subject to economic conditions, currency movements, geopolitical developments, and the assumptions previously disclosed regarding U.S. tariffs and the Middle East conflict. While FY 2026 was certainly a challenging year, it demonstrated the strength of our cans business, the resilience of our people, and our willingness to act when performance does not meet expectations.
We enter FY 2027 having largely completed our cans capacity expansion program and with a clear plan to improve performance in glass. Our responsibility is now execution, improving safety, delivering consistency for our customers, and converting our investments and market positions into stronger earnings, cash flow, and shareholder returns. I thank our team members around the world for their commitment and resilience. I would also like to acknowledge Shaun Hughes for his leadership and contribution to Orora over the past six years, and welcome Paul Victor, who will join us as the Group Chief Financial Officer in early November. Echoing Rob's comments from earlier, I would also like to express my gratitude to Ann Stubbings, who will move on from Orora at the end of 2026.
For more than 13 years, Ann has been such a valued and respected leader at Orora and has made an incredibly positive impact on many teams that she has led during her time with the organization. We wish her the very best. Finally, thank you to our customers, suppliers, partners, and shareholders for your continued support. I'll now hand back to Rob.
Thank you for your participation today and your continued support of Orora. The meeting is now closed. I invite those in the room to join us for some refreshments outside. All the directors here in the room will be available to have a chat to shareholders. Thank you, everyone.