Pro-Pac Packaging has seen steady growth in its sales and revenue for the full year, with its sales revenue coming in at $371.5m, increasing by 62 per cent from $229.2m in the prior corresponding period (pcp).
EBITDA was $16.1m, rising by 32 per cent from $12.2m in the pcp.
Net profit after tax (NPAT) was $3.7m, down 32 per cent while the company saw a loss after tax of $5.1m, a 10.1 per cent decrease from the pcp, which included an $11.7m one off acquisition, rationalisation, relocation and restructuring costs.
Pro-Pac’s earnings were in line with its guidance for the year, with volumes up in cotton, food processing and beverage markets. The company says its margins and sales were impacted by weaker grain bags and silage wrap sales due to drought, higher resin prices and the fall of the Australian dollar.
Going by divisions, Industrial & Flexible delivered the strongest growth, with its sales surging by 83 per cent to $322.4m from $176.4m in the pcp, with the figure including eight months of IPG results from November. EBITDA for the Industrial & Flexible segment, including the IPG results, came to $14.7m, up 60 per cent from the pcp.
Pro-Pac says it experienced increased volumes in food packaging, cotton and beverage customers, while volumes were down for its grain and grass customers due to unfavorable weather conditions.
The company is also commissioning a new high speed flexographic printer to be installed over the next half, which the company says will increase its capacity and efficiency. Details of which site it will go to and what press it is are unclear.
[Related: Perfection principals to move to Pro-Pac]
The rigid sector saw sales of $61.1m, increasing by two per cent while its EBITDA was $6.7m, down four per cent. Volumes in the segment grew in dairy, personal care, nutraceutics and chemical markets. Pro-Pac says it saw improved margins following a review of its supply chain. It also opened a new purpose-built NSW distribution centre.
Capex for the year was $13.5m, almost five times what it was FY17 at $2.8m.
In the past year Pro-Pac made a few acquisitions, including its merger with Integrated Packaging Group (IPG), completed in November. Earlier this year the company also bought Melbourne based Perfection Packaging for $48.9m and Polypak in Auckland for $8m.
Perfection, which claims to be Australia’s largest independent flexo printer, brought in $40.3m in sales and an EBITDA of $6.2m in FY18. Its sale will be completed by the end of this week, with Pro-Pac using the acquisition to extend its sales into higher growth FMCG and food processing markets.
The Polypak purchase in New Zealand was completed in July.
Grant Harrod, CEO, Pro-Pac, says, “The merger with IPG and the acquisition of Polypak and Perfection Packaging provides the company with an exciting platform into the higher growth flexible packaging sector where Pro-Pac has an opportunity as both manufacturer and distributor, to grow these markets. Whilst FY2018 was a year of substantial change and cost, we are transforming PPG into a resilient diversified business, servicing higher growth markets that will help drive a more sustainable earnings profile.
“We are now positioned to increase sales into new markets including fresh and dry food packaging that have a more attractive growth profile as they require local processing, underpinned by increasing consumer demand for product freshness and unitization.
“These acquisitions will also allow the company to improve its operational effectiveness by consolidating manufacturing and distribution sites, where we expect further synergy savings as these are completed.”
Pro-Pac expects the drought, energy prices and foreign exchange top impact its results for the next year, having updated its guidance for FY19 underlying EBITDA to a range of $37-42m.
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