Pact has announced an increased sales revenue of $635.0 million, up 11.9%, in its half year results for the year ended December 2014.
“Pact Group has continued its growth momentum in the first half of the financial year despite subdued trading conditions,” Pact managing director and chief executive officer, Brian Cridland, noted.
These are the highlights:
- Increased sales revenue: $635.0 million, up 11.9%
- Continued track record of growth: Year-on-year EBITDA up 5.2% to $104.8 million (before significant items)
- Increased profit: Net profit after tax, before significant items, increased by 92.6%
- Commitment to financial discipline: Net debt reduced by 6.1% on the prior half year
- Strong cash flow generation: Improved operating cash conversion of 51%, up from 47% in 1H14 due to tight control of working capital
- For shareholders: interim dividend of 9.5 cps – unfranked, for the period ended 31 December 2014
- A promising future: Pact’s Efficiency Review Program demonstrates the company’s proactive response to changing market conditions
Pact sales results by region:
1. Pact Australia
Pact’s increased sales revenue was positively impacted by the partial contribution of the Sulo business acquired in August 2014 and a full half year of the businesses acquired at the time of IPO, Cridland noted.
Pact Australia accounts for 71% of the Pact Group’s sales in the first half of FY15. Pact Australia sales were positively impacted by the contributions from both the Sulo and Cinqplast acquisitions and the sell price increases recovering the lag impact from 1H14.
Overall, Pact Australia experienced sales growth of 9.0% compared to the previous half-year.
2. Pact International (New Zealand, China, the Philippines, Singapore and Thailand)
Pact International contributed 29% of the group’s total sales in the first half of FY15.
Pact International sales were 19.7% higher in the first half in part due to the contributions from the Asian businesses acquired at the time of the IPO.
Drought conditions in New Zealand resulted in some softness in agricultural and dairy sales within Pact International.
“The near even balance in EBIT (53% - 47%) between Pact Australia and Pact International enhances the robust and defensive nature of Pact’s business offering. Pact Group retained its focus on achieving operational efficiencies and productivity gains through cost control and the integration of synergistic acquisitions,” Pact stated in its results report.
Factors in increased EBIT by region:
Pact Australia EBIT increased due to a) increased sales revenue, b) the positive contributions from acquisitions and c) the effect of the business and efficiency programs implemented by the Group.
Pact International increased EBIT through the a) contribution from acquisitions, albeit at lower margins than other international business, b) similar business efficiency programs and c) modest favourable currency translation.
Reducing net debt:
Net debt as at 31 December 2014 was $621 million, $40 million lower than the prior comparative period.
Looking forward:
Pact has confirmed its commitment to deliver on its strategy and on its aspirational vision for the future through a combination of innovation, resilience and growth.
Cridland stated, “The first half of the year contained the usual seasonal outflow of working capital, with operating cash flow weighted towards the second half of the financial year, consistent with the normal cycle of our business.
“Pact is committed to investing in developing our strong pipeline of innovative products and technologies to support customer demands and market drivers. The market continues to shift towards rigid packaging and substrate conversion and we continue to partner with customers and assist them in responding to these opportunities.
“As previously stated, the business will continue to make efficiency savings and continued improvements to lower the Group’s overall cost of operations. As a proactive response to changing market conditions, Pact will implement an efficiency review program, which will comprise a detailed review of its activities. Work is still in the preliminary phase, however, any outcome will be compliant with Pact financial hurdles.
“Pact will also continue to deliver on our strong pipeline of innovative products and technologies, and seek to achieve geographical expansion and acquisitions that support our customers in their regions and deliver long-term shareholder value. Pact reiterates its full year guidance for higher revenue and underlying earnings in FY15 subject to domestic and global economic conditions.”
