Pro-Pac Group's revenue jumped 62 per cent in the 2017-18 financial year, aided by major mergers and acquisitions. However, citing increased raw material costs and the drought, the company posted an after tax loss of $5.13 million.
Revenue increased to $371.5 million during FY2018 from $229 million, the gain coming mainly from the acquisition of Integrated Packaging Group. On a stand alone basis Pro-Pac itself saw sales increase to $242 million, up by $13 million or five per cent on the previous year.
The company's EBITDA rose by 32 per cent to $16.1 million, thanks to increased volumes in industrial, food processing and beverage markets; however, profit after tax plummeted 202 percent falling to a $5.13 million loss.
Rigid Packaging grew by three per cent to $70.7 million from $68 million, while Industrial and Flexible Packaging grew from $176 million to $322 million with the IPG takeover.
For the coming year Pro-Pac says it will benefit from a strong outlook in the fresh and dry foods, industrial and logistics, cotton and beverage markets.
However, the group expects the ongoing drought to continue to impact grain bag and silage wrap volumes in 2019; resin prices are also forecast to keep rising alongside the falling Australian dollar, which the company says will impact on its short term margins.
In 2017-18, Pro-Pac's merger with Integrated Packaging Group, as well as its purchases of Polypak and Perfection Packaging provided the company with a platform into the high-growth flexible packaging sector, according to Grant Harrod, CEO.
He said: "Pro-Pac has an opportunity as both manufacturer and distributor to grow these markets. While FY2018 was a year of substantial change and cost, we are transforming PPG into a resilient diversified business, servicing higher growth markets that will help drive a more sustainable earnings profile.
"We are now positioned to increase sales into new markets including fresh & dry food packaging that have a more attractive growth profile as they require local processing, underpinned by increasing consumer demand for product freshness and unitisation," he said, adding that manufacturing and distribution sites will also be consolidated across the group, creating additional savings. The company projects an EBITDA of $37 million to $42 million in the 2019 financial year."
This article was also published on Print21, sister media brand to PKN.
