Diversified packaging operation Pro-Pac saw its first half figures impacted by lower sales in the agricultural sector, higher costs, and adverse foreign currency movements, with its acting CEO saying the result is “well below expectations.”
Pro-Pac grew its EBITDA by 80 per cent in the six months to December, on sales that were 63 per cent ahead, although the rise in revenue was due to the earnings from its two recent acquisitions. Net profit after tax but before significant items was $6.6m, up 63 per cent compared to $4m in the prior corresponding period.
Sales revenue for the half year was $257.3m, up by $99.5m, which was the contribution from Integrated Packaging and Polypak. Its EBITDA before significant items rose to $17.3m from $9.6m.
The company booked a statutory loss of $144.3m, which came from its $149m goodwill impairment, announced in November. There will be no dividend on the half year.
The market liked the figures though, which were not as bad as had been feared. Its share price - which has plunged by a quarter in the past two weeks - was up by four per cent on the figures. However, at 15c it is still down by two thirds on the 45c it stood at a year ago.
On the half year results acting chief executive officer and chief financial officer, Rick Rostolis, said, “Whilst we saw strong performances in our Rigid business and recent acquisitions, the first-half was significantly impacted by lower than expected agricultural sales in our Industrial & Flexibles business.
“Combined with increased input costs and adverse foreign exchange movements, this has led to a result well below our initial expectations. Earnings have also been negatively impacted by the lag in recovering significantly higher raw material input costs through price increases.”
The company advised that given what it says are weak macro-economic conditions, its full-year 2019 EBITDA (before significant items) is likely to be at the lower end of its guidance range of $30m-$33m.
Pro-Pac is still looking for a new CEO following the resignation of former incumbent and ex-Salmat CEO Grant Harrod late last year. Harrod remained with the business until last Friday.