Pro-Pac Packaging CEO John Cerini says the company’s period of rationalisation of sites, plant and services is over, with the business now positioned to focus on growing its profits.
Speaking on the release of its annual results Cerini said, “We have exited the machinery, the sites and the segments, particularly in speciality packaging, that we wanted to exit, and we are now focused on revenue and profitability growth.”
Pro-Pac’s revenue dipped by five per cent in the financial year to $339m, but it’s EBITDA continued its recent trend upwards, reaching $1.1m in the year. Cerini and CFO Dominic Romanelli pointed to the march out of the red, saying that in the second half of 2022 its EBITDA was minus $5m, in the first half of this year minus $800,000, and the second half of this year it was in the black to the tune of $1.9m. Cerini said he expects that trend to continue into the 2024 financial year.
Cerini told analysts that new customer wins, such as Arnotts, was evidence of the opportunity in front of Pro-Pac, and said there were many more opportunities to convert prospects currently in the pipeline into sales.
The company is also focusing on its industrial soft plastic recycling plans, and has already received the first tranche of a $6.1m government grant to help develop that, which Cerini said Pro-Pac will do with partners. The company aims to turn waste soft plastic into stretch film and shrink-wrap.
The 2023 revenue of $339.1m was 5.5 per cent down on last year’s $358.7m, with Cerini saying it had been a challenging year with high inflation, and the site rationalisation also meant lower margin revenues were gone, but said its focus on higher value-add and higher margin products had, and would, stand it in good stead. He said there would be little in the way of capex in the coming year.
Flexibles revenue dropped by 5.1 per cent from $279.5m to $265.3m, while EBITDA doubled to $2m. Speciality Products revenue fell by 6.8 per cent, to $73.8m from $79.2m, but EBITDA was up, only to $700,000, but that’s an improvement on the $100,000 recorded last year.
Pro-Pac debt came down by $9.7m from $23.6m to $13.9m.
Looking ahead Cerini said the environment “remained challenging” but he expected “increased profitability to continue”. He said, “We will focus on those elements in our control in financial year 2024.”
The market wasn’t too impressed by the results, Pro-Pac’s share price dropped three per cent on the release of the figures, but it is still up by 50 per cent on four weeks ago, and back around the level it was trading at all year, before it fell off a cliff in May.
