Pact unpacks $567.6m half year sales

Home grown packaging outfit Pact is reporting sales revenue of $567.6m for the first half of FY2014, its diverse core markets lifting results despite reduced volumes from a major Australian customer in 2013.

Revenue was up by 0.2 per cent on last year’s $566.6m for the same period. The company also reports an EBIT of $75m – up by 0.1 per cent – and around $20m less net debt than it was expecting; though it is still carrying $661.3m.

With operations in Australia, New Zealand and Asia, Pact converts plastic resin and steel into packaging and related products that service customers in the food, dairy, beverage, chemical, agricultural, industrial and other sectors.

Pact Australia, with its 39 manufacturing plants in Australia, reports first half sales of $409.9m – down by 1.0 per cent, and EBIT of $39.2m – down by 17.5 per cent. While increased raw material costs meant higher sales prices for the Australian business (and a decline in EBIT), total sales revenue was knocked by a reduction in volumes from a major customer in tandem with weaker demand in the agricultural chemicals market, caused by drought.

Growth-wise results look a little better for the group in New Zealand and Asia; 23 manufacturing plants servicing the higher growth markets of China, the Philippines and Thailand as well as NZ delivered for Pact International first half sales of $157.7m – up by 3.4 per cent, and EBIT of $35.8m – up by 30.7 per cent.

Pact says it saw improved demand from New Zealand in FY2014, with favourable NZD currency exchange gains as well as better volumes and product mix.

In South East Asia it has recently won a contract to supply a personal care player, which it expects to cater for growth in the region.

The company debuted on the ASX in December last year to what has been described as an underwhelming reception; its shares opened at $3.50 and have never traded above their issue price of $3.80. The first half FY2014 figures are the first for Pact as a public enterprise.

Raphael Geminder, founder and chairman of Pact, says the results are tracking to forecasts, and calls the figures “a pleasing and consistent result during a period of transition for the company.

“As we move into the second half, we are focused on integrating recent acquisitions, delivering further operational efficiencies and positioning Pact for future growth through innovation and geographic expansion.”

Last year Geminder told The Sydney Morning Herald the company was focused on long term growth, and it was not ‘productive to focus on short-term market volatility’.

Looking ahead to the second half of FY2014, Pact expects results to be impacted favourably by settling in its IPO acquired entities (Viscount China, Asia Peak, Ruffgar Holdings and Cinqplast Plastop Australia), and by its business rationalisation and efficiency programmes begun in 2013.

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