Pact Group announced a net profit after tax of $80.8m for the 2020 financial year, an increase of 4.5 per cent on 2019. And, Pact reported it would recommence the sale process of its contract manufacturing business after the process was suspended due to Covid-19 restrictions.
Pact Group managing director and CEO Sanjay Dayal said the company delivered improved earnings and margins and strengthened its balance sheet.
“These results, delivered in a period where we faced the uncertainty of Covid-19, and the challenges of other macro events, illustrate the resilience of our portfolio, and our discipline in managing cash and protecting our balance sheet,” he said.
“Demand in most consumer sectors was resilient during the Covid-19 affected period, particularly in the food, home care, and hygiene categories. Our strong local manufacturing and service capabilities enabled us to provide security of supply to our customers and quickly respond to their changing needs.”
Dayal said underlying volumes in the Australian packaging businesses remained challenging over the 2020 financial year.
“While the industrial sector experienced some benefit in the second half from easing of drought conditions, this benefit was offset by the impact of the bushfires and other macro factors,” he said.
“Volumes into the dairy, food, and beverage sector were lower, and health and wellness volumes continued to be impacted by customer destocking. This also impacted our contract manufacturing business, with the health and wellness category down significantly on the prior year.”
Dayal said Pact saw some demand slowdown in the industrial sector, which was impacted by end-market disruption during the Covid-19 pandemic. He said company’s garment-hanger reuse business, TIC, was adversely impacted by significant weakness in the clothing retail sector.
“Aside from Covid-19, underlying demand trended in line with our first half,” Dayal said.
“We delivered solid organic growth in our materials-handling segment following the expansion of pooling services into the Aldi fresh produce supply chain and the expansion of reuse services in the US to support a major new contract. Volumes in our offshore operations were up, with both New Zealand and Asia improved.”
“We improved the strength of our balance sheet despite the challenging backdrop in the period. We reduced net debt and significantly improved our gearing. Gearing at the end of the period was 2.6x, well within our targeted range. Operating cashflows were strong, illustrating disciplined working capital management, and capital expenditure was well controlled, with spend in the period strongly aligned to the delivery of the group’s strategy.”