Diversified marketing communications group IVE, which is currently building a major folding carton packaging business, saw its profits rise strongly, on flat revenue, in the first half of the financial year.
Its investment in its folding carton business continues unabated, it will spend some $18m this year in packaging capex, including sheetfed presses, die cutters and folder gluers.
IVE says the $15m of available capacity it had at the $45m a year JacPak in Victoria when it bought it 18 months ago has now been taken up, delivering a $60m a year operation, with the new Sydney site to add a further $30m. Phase 2 of the folding carton plan has a five-year time frame, and a $150m a year target.
IVE has also just started building a new 42,000sqm print supersite at Kemp’s Creek in Sydney’s west, with the site expected to be fully operational by March next year.
The new supersite will house its packaging business and its commercial print operation, which are currently located in its long term home in Silverwater, and its brand activations (display print) operation which operates from Granville.
IVE’s EBITDA, EBIT, net profit after tax, and margins were all up in the first half, on what was itself a record prior corresponding period. The IFRS NPAT more than doubled, up to $27.1m, which the company attributed to a ‘strong uplift’ in underlying profitability, coupled with a significant reduction in non-operating items.
Sales revenue was up a smidgen on the same period last year, rising by 0.4 per cent to $507.8m in the six months. EBITDA rose by 12.6 per cent to $74.1m, EBIT was up by 23.4 per cent to $51.4m, while NPAT surged by 29.1 per cent to $29.3m.
The company has now fully realised cost synergies from the acquisitions of Ovato and JacPak. Its net debt dropped by five per cent to $121.4m thanks to ‘greatly reduced’ restructuring costs, although they were partially offset by peak working capital seasonality and with the capex associated with the company’s packaging capacity build-out.
IVE is investing in new Koenig & Bauer sheetfed presses for its packaging business, and in die cutters and folder gluers. It will invest some $18m building its packaging capacity this year, that figure net of proceeds from existing equipment disposal.
Commenting on IVE Group’s FY25 H1 performance, managing director, Matt Aitken said: “Given continued economic uncertainty and persistent inflation, I am extremely pleased with the first half result which was up materially relative to the prior period. In addition to a strong underlying performance, the half included a full run-rate of Ovato and JacPak (cost) synergies, with JacPak’s $15m of available revenue capacity now committed as per the acquisition business case.”
In light of the strong figures the IVE has revised its FY25 underlying NPAT guidance range to $47m-$50m, from $45m-$50m previously).
Non-operating items excluded from guidance and underlying earnings include its online marketplace Lasoo operating at a loss similar to FY24; and restructuring and other costs of around $3.5m.
Capital expenditure is now expected to be around $32m, including $18m relating to the packaging capacity build-out (net of disposal proceeds), the increase reflecting the bringing forward of additional packaging equipment purchases.
The new Kemps Creek site will also house the company’s CX and Data business, now running from Homebush; and the paper storage for its web offset operation, which is currently stored in Warwick Farm.
IVE will save $3.1m a year in rental costs, operating efficiencies including consolidation of leases, and says it will benefit from common operational functions such as dispatch and receiving as well as reduced handover costs. It will also have a centralised, strategic labour pool to optimise labour mix, enabling flexibility across business units, which it says will reduce external labour hire and minimise overtime.
The new site will also provide additional space to accommodate further expansion, particularly to facilitate Phase 1 and 2 of the packaging strategy.
Capital expenditure and relocation costs associated with the supersite consolidation, largely impacting FY26, will be disclosed with the FY25 result, due out in August
IVE is also building a new 33,000sqm 3PL facility, which will become 3PL’s largest site and will provide an additional 60 per cent of storage capacity for IVE’s Victorian clients, increasing its 3PL’s national capacity by 30 per cent to 80,000sqm from 62,000sqm currently.
