Colorpak out of the red

Colorpak profit has surged 125 per cent for FY15 on flat sales with the company expecting its resurgence to continue into 2016. The somewhat minor fall in revenue from $161.9m to $161.1m in its annual report is well outweighed by the huge turnaround from last year’s loss of $12.4m to a $5m profit. Alex Commins, Colorpak CEO, says at the halfway point of FY15 the productivity gains mapped out in Victoria had slipped from the company’s grasp due to the magnitude of changes it had not been able to capitalise on in the timeline it set.

Colorpak chief executive Alex Commins

Colorpak chief executive Alex Commins

He says, “In a much stronger performance in the second half, the Victorian division was able to effect the many changes required to deliver some of the productivity improvements expected, albeit delayed. “With some good momentum and solid progress to workflows and process now embedded, we are confident to see further productivity improvements flow into the FY16 numbers. “A review of our results will reveal that year-on-year FY14 and FY15 were remarkably similar in overall sales and profit generation on an underlying basis. He says the company’s ‘disciplined approach’ to free cash generation and retirement of core debt has led to net debt declining to $31.4m from $39.4m 12 months ago. “A small acquisition was made in March 2015 of a well-reputed pre-press provider known as The Connection. This compliments and expands the core capabilities and reach of the Brandpack division, and brings with it a new suite of customers to the value of $1.7m per annum. “Foilmasters manufacturing footprint was re-sized to service internal customers only, freeing up valuable floor space for further expansion into paper cups and allowance for raw material storage.” Geoff Willis, Colorpak chairman, says: “In a year where the board brought the focus back from restructuring to cashflow management it is pleasing to note that net debt was decreased by $8m to $31.4m. “Working capital was tightly controlled, capital expenditure was allocated to only the most favourable projects and free cash was applied to debt reduction. “The two dividends paid during the year were opened to the Dividend Reinvestment Plan and each was underwritten to strengthen the balance sheet. “Gearing at June 30, 2015 was recorded at 34.7 per cent and while there are no debt repayment requirements on the group’s bank bill facilities before January 2017 we are forecasting further debt reductions in the year ahead.”

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