Glass bottle giant Orora halts Middle East production amid war and warns of hit to earnings

Glass bottle and aluminium can manufacturing giant Orora has halted production at its facility in the United Arab Emirates amid ongoing tensions in the Middle East, with the company also warning of an earnings hit.

The Ras al Khaimah facility — which represents about 15 per cent of Orora’s bottle-making business Saverglass’ production capacity — has shifted to a “closed loop hot operation”, meaning the furnace is kept warm with no manufacturing taking place.

The listed Melbourne-based company said it had moved production to Mexico after the Middle East war, now in its sixth week, closed shipping routes and made alternative overland routes inaccessible.

In a trading update on Thursday that sent its share price to a 12-year low, down 20 per cent, Orora said it now expected Saverglass to report earnings of between €52 million ($86.2m) and €59m in the 2026 financial year, compared with €79.2m reported last year.

This includes a one-off hit of about €9m and €11m related to the Ras al Khaimah facility, it confirmed.

“This is a dynamic situation. We’re using the benefit of a global manufacturing footprint to reallocate production where we can whilst prioritising safety and continuity of suppliers for our customers,” Orora chief executive Brian Lowe told investors.

Orora supplies packaging to some of the nation’s biggest beverage brands, including cans for Asahi, which is behind the Carlton Dry, Great Northern, Balter, Pepsi and Solo brands.

The company’s cans business is operating as usual. Saverglass counts popular vodka brand Grey Goose among its major customers.

Orora said it had also observed “a combination of a slower offtake in spirits, and a mix shift towards lower price and margin spirits products”.

While it still expects total sales volumes in the 2025 financial year to be higher than the prior corresponding period, it will be lower than previously anticipated.

Orora shares slumped to a 12-year low on Thursday, with the stock down as much as 20.3 per cent, before closing down 18 per cent.

It comes as food and beverage manufacturers warn surging supply chain costs triggered by the war, including the price of packing alongside petrol and diesel, could be passed onto consumers.

Not only have supply chain shocks triggered by the war sent oil prices soaring, they have also created a shortage of resin — a key ingredient used to make plastic bottles and often imported from the Middle East and Asia — that has put packaging supplies under pressure.

Bega Group, behind the Vegemite brand, recently told a food forum it was working on sourcing alternative supplies.