Pro-Pac profits rise on revenue hit

ANZ packaging group Pro-Pac achieved an 18 per cent rise in its profit after tax, on revenues that declined by $38m, in a year described by CEO Tim Welsh as transformative.

Annual sales achieved by the group fell to $440m from $478m the year before, while profit after tax rose to $7.8m from $6.6m, profit before tax rose by 30 per cent to $18.8m.

The company said the revenue decline was due to several factors, including the Flexibles’ exit from the Australian forage market, the Canadian market, and the divestment of the Integrated Machinery business, which together cost it $14.5m. One of its customers moving from a retailer to a wholesaler for sileage cost it $2m. Year on year transitional Covid-19 impacts relating to cotton exports, local demand volatility and global shipping delays were responsible for 19.8m, while a targeted shift in business mix within Flexibles and Industrial Specialty Packaging as they continued to execute the group’s strategy to refocus the portfolio on higher value market verticals cost $17.8m.

However, the decline in revenue was partially offset by some wins in new business, in line with the Group’s strategic shift to higher margin, bespoke products, which saw $11m of extra revenue come in, and the acquisition of Supreme Packaging, which contributed $5.1m.

Tim Welsh said: “FY21 has been a year of transformation for Pro-Pac, during which we have delivered on several key strategic initiatives including site consolidation, the creation of Flexibles printing and conversion Centres of Excellence, and the launch of Project Symphony, our technology led enterprise-wide transformation program that will deliver our new Enterprise Resource Planning software.”

The transformation activities are expected to deliver annualised benefits of around $7m from next year. Highlights of the year included the exit from its Chester Hill plant, and investment in new technology, including a seven-layer extruder & laminator.

Welsh said, “Packaging is a critical industry that touches the lives of millions of Australians every day. As an Australian and New Zealand business that is focused on using its investment and manufacturing expertise to capitalise on key industry trends including innovation and sustainability, we are confident about the opportunities for Pro-Pac to keep expanding its packaging and recycling capabilities and grow revenue.”