SYDNEY--Orora swung to an annual loss on a hefty impairment charge against its glass business, while offering a cautious outlook as it seeks to overcome challenges that include conflict-driven disruption to its operations in the Middle East.

Orora reported a statutory net loss of 616.6 million Australian dollars (US$435.6 million) for the 12 months through June, down from a A$973.1 million profit a year ago that reflected a major gain on the sale of the OPS business to U.S.-based Veritiv.

The statutory loss was driven by a significant item of A$758.8 million, which largely comprised a A$728.2 million impairment charge against its glass business.

Orora has grappled with multiple challenges since it acquired premium glass bottle maker Saverglass for some US$2.16 billion in 2023. Recently that has included the Middle East conflict, which closed shipping routes to the Ras al Khaimah bottle-making facility in the United Arab Emirates and damped customer confidence.

"While Saverglass retains attractive medium-term growth prospects, recent earnings were impacted by U.S. tariffs, the ongoing Middle East conflict and cost-of-living pressures across key markets," said Brian Lowe, Orora's managing director and chief executive. "As a result, we have reassessed our expectations for the business relative to our 2023 acquisition."

Lowe said a revised view of the timing of the recovery in consumer demand and Saverglass earnings led to the impairment charge.

Orora's underlying profit fell by 5.9% to A$142.2 million in the 2026 fiscal year, despite improved volumes and earnings from its cans division.

Directors of the company declared a final dividend of 4.0 Australian cents a share, down from a payout of 5.0 cents a year ago. That brought the total payout for fiscal 2026 to 9.0 cents, representing a full-year payout ratio of 78% of net profit.

Orora's challenges led management in April to temporarily halt an on-market share buyback while it monitored the implications of the Middle East conflict, surprising some analysts. The company said on Thursday that it will restart the buyback following its annual result.

In normal times, the RAK facility in the U.A.E. would produce global premium and ultra-premium wines for the North American market. Orora has shifted this output to Mexico, while temporarily running the RAK facility as a closed-loop 'hot' operation, whereby the furnace would be kept warm but producing no bottles.

Orora said on Thursday that it has begun efforts to restart the RAK glass production facility on a restricted-volume basis from October, using alternative shipping routes in Oman.

Another impact of the conflict has been a souring in consumer confidence, which has manifested as a shift toward premium wine and champagne compared to a decline in premium spirits. That has put pressure on bottle makers' average selling prices and profit margins.

Orora said adverse price and mix effects experienced by Saverglass in the second half of fiscal 2026 are likely to persist into the first half of the new fiscal year. It expects these will offset volume growth and cost savings.

Orora forecast Saverglass's Ebit to fall in fiscal 2027 when calculated in euros. In the cans business, Orora expects a higher Ebit and projected volumes consistent with long-term growth rates.

"Group Ebit is expected to be lower than FY26 reflecting higher depreciation and amortization and lower Saverglass Ebit," Orora said. "This outlook is subject to global and domestic economic conditions, currency fluctuations and assumes no further changes to U.S. tariffs or the Middle East conflict."