Orora slashes Saverglass forecast as Middle East conflict bites

Orora Group (ASX:ORA) issued a trading update for the 2026 financial year, revealing a sharp downward revision to the earnings forecast for its Saverglass business.

The company now expects Saverglass to report an EBIT of €52 million to €59 million, a substantial drop from previous guidance which sat at approximately €79.2 million.

The correction is primarily attributed to the direct and indirect fallout of the Middle East conflict that escalated in late February.

The most acute disruption involves the Ras al Khaimah (RAK) facility in the United Arab Emirates.

Due to the closure of vital shipping and overland routes, Orora has transitioned the plant to a "closed-loop hot" operation.

While this maintains the furnace’s integrity and ensures the safety of regional staff, it effectively halts all bottle production at a site representing 15% of Saverglass’s total capacity.

To mitigate this, production for the North American premium wine market is being shifted to Mexico, though the one-off impact of the RAK shutdown is estimated at €9 million to €11 million.

Beyond operational hurdles, the conflict has triggered a shift in consumer behaviour. Management noted a negative "mix shift", where a decline in high-margin premium spirits has outweighed steady performance in wine and champagne.

The "indirect" impact, driven by weakened customer confidence, is expected to shave a further €11 million to €16 million off second-half earnings.

At the time of reporting, Orora Group’s share price was $1.64.