Page 9 - Packaging News Magazine Sep-Oct 2019

9
September-October 2019 www.packagingnews.com.au
NEWS
Pact Group posts $290m 2019 loss
Pro-Pac gains boost shares
RIGID packaging market leader Pact Group has cited the drought, weaker demand from the agri and food & beverage sectors, and high- er raw material and energy costs as contributing to its FY19 loss.
Following the results announce- ment, Pact’s stock dropped 16.9 per cent to $2.31 – with Sydney Morn- ing Herald reporting it was the day’s biggest loser on the ASX 200 – and cutting the company’s market value by $162 million.
Pact Group MD and CEO, Sanjay Dayal (pictured), who took the helm in April this year, said FY 19 was a challenging year, but that pricing had im- proved in the second half, and resin costs had reduced, enabling the group to recover some of the adverse pricing lags which had impacted earn-
ings in recent periods. “We contin- ued to manage our controllables, delivering significant efficiencies in our operations and reducing overheads. We made meaningful steps in the transformation of our packaging network with the clo- sure of two facilities in the second
half, the rationalisation of another and the establish- ment of an import channel to support supply in several product categories,” Day-
al said.
He cited the recent
contract win with Aldi as a success sto- ry for its crate pooling business, which has delivered growth, saying it is “testament
to the service quality and capability” Pact has developed in its
pooling business. ■
PRO-PAC shares rose strongly as its full year results were released, but the next day they were back to where they were, as 2019 EBITDA for the company rose by 72 per cent to $28.1m.
For the year Pro-Pac sales increased by 30.8 per cent to $485.8m. The company said its revenue and earn- ings growth was primarily from the Polypak and Per- fection Packaging acquisi- tions, and the incremental four-month impact of the November 2017 acquisition of Integrated Packaging.
Excluding the contribu- tion from recent acquisi- tions, sales revenue was down $20m on the previ- ous year, with Rigid Packag- ing delivering moderate sales volume growth while
Industrial Packaging suf- fered from reduced sales and margin (primarily the food segment) in the second half of the year. Flexibles packaging was impacted by weaker than anticipat- ed sales to the agricultural sector of the market.
Flexibles EBITDA was up by 237 per cent to $18.8m, Industrial was down by 39 per cent to $3.7m, while Rig- idwasupby27percentto $6.6m. Earnings before in- terest and tax before signifi- cant items was up by 80 per cent to $18.8m, while net profit after tax before signif- icant items was up by 148 per cent, to $7.7m.
Significant items of $159m sent the company into a statutory net loss after tax of $151.3m. ■