Orora shutters UAE plant as Middle East conflict slashes Saverglass earnings by a third

UAE – Orora has closed its Ras al Khaimah bottle plant in the UAE, representing 15 percent of its Saverglass division’s capacity, as six weeks of Middle East conflict disrupted shipping routes, forcing production to shift to Mexico while earnings from the high-end spirits bottle business are expected to fall up to a third below expectations.

The Melbourne-based glass and can manufacturer said Saverglass is expected to report earnings between €52 million (approximately US$56.5 million) and €59 million (approximately US$64.1 million) for the current year, compared with €79.2 million (approximately US$86.1 million) in the prior 12 months.

Part of that reduction is due directly to the plant closure, estimated at between €9 million (approximately US$9.8 million) and €11 million (approximately US$12 million), alongside lower sales as consumer preferences shift back toward high-end wine and champagne and away from premium spirits amid weak sentiment.

A US$2.2 Billion Bet Turns Sour

Orora acquired the 129-year-old French Saverglass business for US$2.2 billion (approximately €2.02 billion) in 2023, hoping to shift into the market for high-end spirit bottles used by brands like Grey Goose and Hennessy amid a slump in wine and beer consumption. Instead, earnings have fallen, angering major investors.

The uncertainty has also forced Orora to pause a share buyback announced late last year for up to US$270 million (approximately €248 million).

Market Reacts Sharply

Orora shares, already down 11 percent since the start of the year, fell another 16 percent when the market opened to US$1.66 (approximately A$2.48 based on pre-pandemic levels).

They had traded above US$4 (approximately A$6) before the pandemic.

Chief executive Brian Lowe explained that the company is using its global manufacturing footprint to reallocate production while prioritizing safety and continuity of supply for customers.

He noted a noticeable change, particularly through March.

The Math Behind the Hit

Jarden analyst Jakob Cakarnis calculated an indirect earnings hit of €3.4 million (approximately US$3.7 million) per month from the conflict.

Chief financial officer Shaun Hughes confirmed the analyst’s math was not incorrect.

The Ras al Khaimah plant represented about 15 percent of Saverglass’s capacity, making its closure a significant operational blow.

Production is shifting to Mexico, but the disruption has already filtered through to financial results.

The Bottom Line

For the packaging industry, Orora’s experience demonstrates how geopolitical shocks can rapidly reshape manufacturing footprints.

A plant representing 15 percent of capacity cannot be idled without consequences, and shifting production across continents takes time and money.

As consumer preferences shift and conflict disrupts logistics, even premium packaging is not immune to the math of war.

Subscribe to our email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE