Industrial & flexible and rigid packaging solutions provider Pro-Pac Packaging has announced revenues of $371m for the year ended 30 Jun 2018 (‘FY18’) and a statutory loss after tax of $5.1m.
This result includes eight months of trading for Integrated Packaging (‘IPG’) following its acquisition on 6 November, 2017 and one off abnormals and write offs of $11.7m stemming predominantly from the acquisition.
Revenue for PPG on a standalone basis was $242 million, up $13 million on the previous corresponding period, FY18 has seen volumes increase in key industrial, food processing and beverage markets for the Group, but rising raw material costs and the drought have adversely impacted sales and margins.
Integration synergies following the acquisition of the Integrated Packaging Group in November 2017 continue to exceed forecast with major site consolidations and rationalisation well underway.
Underlying EBITDA of $16.1m was in line with the guidance provided while Profit Before Tax (PBT) for the Group was $5.3 million, after adjusting for $11.7 million of one-off items attributed to the IPG acquisition and resulting rationalization, relocation and restructuring costs.
Board renewal program completed with the appointments of Mr Darren Brown on 2 July 2018, Ms Leonie Valentine and Ms Marina Go on 1 August 2018. Mr Ahmed Fahour resumes his role of Non-Executive Chairman and management renewal is well underway.
The recently announced acquisitions of Perfection Packaging and Polypak will enhance the Group’s capabilities to access the higher growth flexible packaging markets and provides further scope for rationalization of facilities and infrastructure and the resultant extraction of synergies in the short to medium term.
Pro-Pac CEO Grant Harrod said: “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 a unique 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 & 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” Mr Harrod added.
Following the changes undertaken in FY2018, the PPG Group is now on track to achieve higher revenue and earnings in FY2019. The Group expects:
• It will benefit from the strong outlook in the fresh & dry foods, industrial & logistics, cotton and beverage markets,
• achieve additional synergies with further site consolidations and improved operational effectiveness,
• the ongoing drought to impact grain bag and silage wrap volumes,
• the continued rise in resin pricing, plus falling AUD$, will result in a short-term margin impact before customer rise & fall clauses take effect.
• the Perfection Packaging acquisition to complete on 1 September, 2018, and Polypak, (completed 1 July’18), is trading ahead of expectation, both will extend the company’s sales into higher growth FMCG and food processing markets reducing current exposure to agriculture.
Given the ongoing uncertainty of the drought, energy prices and foreign exchange, the company has updated its FY2019 underlying EBITDA to a range of $37 to $42 million, including acquisitions, with upper end dependent upon a more favourable macro environment.
Reflecting its confidence in the prospects for the business, the Board today declared a fully franked final dividend of 1.0 cent per share. The record date for determining entitlement to the dividend will be 11 September 2018 and the dividend will be paid on 6 November 2018. The PPG Board confirmed it will continue its Dividend Reinvestment Plan for this dividend.
Company: Press Release.