Colorpak hits the profit mark

Colorpak has defied challenging market conditions and a smaller revenue base to report a profit after tax of $4.719 million for its latest half yearly results, in line with expectations.

Colorpak managing director Alex Commins said the result was particularly pleasing considering the difficult economic climate and the effect of the ongoing consolidation of its acquisition of the folding carton assets of Carter Holt Harvey (CHH).

“On a smaller sustainable revenue base [first half 2013 revenue of $94.223 million versus first half 2012 revenue of $104.100 million] due predominantly to anticipated loss of low margin business that was taken on in the CHH acquisition, we have maintained profits by making timely adjustments to our cost base, generating increased margins and cash. We have also lifted shareholders dividends and reduced debt,” Commins said.

He said the company had made progress in reducing its debt arising from the CHH acqusitioin, down 14.7 per cent from $38.917 million in to $33.183 million.

“At the end of the financial year 2012 we noted that the company was at the peak of its debt cycle and bottom of its margin cycle,” he said.

“Just six months later and 22 months after the acquisition of the Carter Holt Harvey assets, we have turned it around, absorbing the acquisition costs, shedding low margin business and increasing production efficiencies to achieve a near record half-year result.”

He noted the company had also in the period announced a $30 million five-year supply contract extension with global pharmaceutical company, Astra Zeneca.

“We are focused on the bottom line - targeting high margin sectors as well as those producing everyday staples - while at the same time continuing to reduce production costs,” Commins said.

He said that, looking forward, he expected the company's underlying results of business to continue to track well, though seasonal trends in revenues were likely to result in profit in the second half being lower than the first.