Revenues were down by more than 13 per cent in both Flexibles and Specialty Packaging at Pro-Pac for the half year to 31 December. However, the company said that by the end of the financial year volumes will be at or above last year's level.
John Cerini, CEO and managing director said it had been a “challenging” and “volatile” market, citing reduced consumer spend in a period of high inflation, accelerated post-Covid destocking by customers, and adverse weather in Australia and New Zealand which impacted its agricultural volumes, as the key factors for the drop in revenues.
The company recorded a loss on its continuing and discontinued operations of $5.5m, which was down from $6.3m in the last financial year. However, it managed to take its EBITDA from $900,000 in the red last time to $1.2m in the black, an uptick of $2.1m.
Total revenue for the half year fell by 13.3 per cent to $158.9m from $183.3m in the same period last year. Flexibles was down by 13.2 per cent to $124.5m from $143.4m, while Specialty Packaging fell by 13.8 per cent to $34.4m, from $39.9m.
Of the 13 per cent drop in revenues, some eight per cent was from decreased volumes, while five per cent was attributed to pass through costs written into existing contracts, as the price of resin particularly rose strongly.
The company's Perfection Packaging division has just commissioned a new eight colour flexo press, bought for $2.6m, which it says has the capacity to accommodate future volume growth. It represented the bulk of the $4.9m in capex for the half year.
Looking ahead to the second half of the financial year, John Cerini said, “We are in a soft market, with subdued volumes. The war in the Middle-East is starting to affect logistics, and customer sentiment. However, we forecast that for the full year, Pro-Pac’s underlying volumes will be at or above last year’s level.”
Pro-Pac is pushing on with its soft plastics recycling plant in Albury, which will be developed by majority shareholder Kin Group. Pro-Pac has received a government grant of $13.9m towards the $30m project, and says this will mean it will use little of its own cash until 2025 for the project. The development application for the site will be lodged shortly, with initial building works planned to commence by the end of this calendar year. Cerini said, “Pro-Pac will take a leading position in soft plastic recycling.”
It is currently looking for partners to establish a consortium of parties to optimise the collection of feedstock, processing of waste plastic films, and the offtake of manufactured products with recycled content.
