Colorpak withstands headwinds to post growth

Colorpak says the rationalisation of assets acquired through the purchase in 2011 of the folding carton assets of Carter Holt Harvey (CHH) has enabled it to withstand “manufacturing headwinds” and post an 8.8 per cent rise in earnings before tax for the 2012-2013 financial year.

Announcing the company's full year financial results, managing director Alex Commins told PKN the consolidation of the CHH assets and a focus on improving internal efficiencies had resulted in the company being able to achieve its earnings rise to $18.2 million for the year.

“We have obviously been operating against a tough economic backdrop, particularly in the past six months, but we have still managed to grow the business which is a very pleasing outcome,” Commins told PKN.

“Colorpak has maintained its commitment to be the most efficient, high quality supplier in the folding carton sector, concentrating on market segments which generate sustainable returns,” he said.

Commins said the company's net profit before tax of $10.743 million was up 16.1 per cent over the previous year. After tax profit, however, was 2.2 per cent lower than in 2012, at $7.494 million.

He said these results were achieved despite a decline in direct revenue from customer sales.

Revenue from sale of goods was down 10.4 per cent for the year, due to what Commins said was the ending of unprofitable contracts and customers moving offshore.

Commins said, however, that the company's compound sales growth had averaged 13.5 per cent over the past decade.

He said the company was well placed to prosper in coming years as it reaped the benefits of cost cutting, completed its rationalisation of CHH assets and retired a significant amount of debt.

Just last week, the company announced the final step of that rationalisation when it said it would consolidate the former CHH Mt Waverley, Victoria, facility into Colorpak's Braeside site (packagingnews.com.au, 31 July).

“It has all taken a lot of hard 'yakka', but in a tough environment we have prevailed,” he told PKN.

“Following the rationalisation of the manufacturing footprint in NSW and Victoria, a leaner stronger, more competitive Colorpak is emerging. Colorpak is well positioned for recovery in consumer demand.”

He said the company also expected further improvement in general economic conditions, with the recent drop in value of the Australian dollar reducing the risk of its customers moving operations offshore.

Caption: Colorpak says improving economic conditions, and its own leaner operations, have positioning the company for growth in coming years.