Pro-Pac saw its profit before tax rise by 0.9 per cent, on sales that fell by 6.6 per cent in the half year to December, with underlying profit before tax rising by a third to $11.7m.
The company expects its full year 2021 results to be above the 2020 figures, and the Board has reinstated an interim dividend of 25c per share for the half year. Pro-Pac did not need to access JobKeeper, nor COVID-19 rent relief, in the period.
Group revenue fell to $234.4m from $251m in the prior corresponding period. Statutory profit before tax was $8.84m, up from $8.76m, profit after tax slipped by 2.9 per cent to $6.2m, while the underlying profit margin rose by 150 basis points, to 5 per cent.
The Flexibles business outperformed prior year earnings, despite an 11.2 per cent drop in revenue to $135.7m, with profit before tax up by 9.9 per cent to $9.7m, and margin increasing to 7.1 per cent from 5.8 per cent. Revenue decline came from offloading the forage business, exiting Canada, and from reduced cotton exports.
Industrial revenue was down by 7.1 per cent at $62.6m, but profit before tax rose by 61 per cent to $1.1m. Lower revenue was partly down to the group selling the Cosmic Packaging business. Pro-Pac says it is focusing its product range to sectors “where we know we can win”.
Although the smallest division in the group, the Rigid business was a standout performer, with revenue up by 17.1 per cent to $36.1m and profit before tax up by 19 per cent to $3m. Rigids was boosted by COVID-19 demand for triggers and pumps for hand sanitisers.
Panic buying that characterised the early stages of COVID-19 a year ago was largely absent from the July-December period, meaning demand volatility had eased, although Pro-Pac acknowledged that the ongoing issues in global shipping were causing supply chain disruption.
Tim Welsh, CEO and managing director at Pro-Pac said, “I am delighted with the progress we have made in delivering on our strategy during the first half of the year. Each of the business divisions performed well and delivered margin uplift and earnings growth.
“We have also made critical investments to ensure the successful delivery of strategic projects and to build capability, systems and frameworks to support our governance and future growth objectives.”
For the full year the company says that provided there are no unexpected adverse macroeconomic nor COVID-19 issues, and no major disruptions to its supply chain. It expects its profit before tax and significant items to be above the 2020 figure.
Pro-Pac’s $3.2m acquisition of Clayton-based flexible printer and bag-maker Supreme Packaging went through on 31 January, with Pro-Pac anticipating it will deliver revenues of between $10m and $12m next year.