Astrapak’s interim results for the half-year to 31 August 2015 indicates that the turnaround strategy employed continues to gain traction showing notable improvement across various indicators within the Group.
During presentation of the interim results in Johannesburg on Wednesday, 30 September, Astrapak CEO Robin Moore reminded stakeholders that Astrapak is mid-way through a five-year turnaround strategy to rightsize the business and deliver sustained profit. “We’re firmly focused on finalising the exit from non-core businesses and remove expenses deliberately incurred to facilitate this recovery.
“The Group’s first half performance yielded acceptable overall results in the context of a weak trading environment while making pleasing progress with our cash position and debt reduction.
“We are steadily bringing operations up to internationally benchmarked returns. The Group is on track to an optimally rightsized overhead structure. General economic conditions have deteriorated, making the timeliness of business reengineering that much more appropriate.
“This is the healthiest financial result reported by the Group in many years and positions the Group to take advantage of potential growth opportunities,” said Moore. He did however caution, “This is work in progress, but we’re building momentum.”
An attributable profit of R20,1 million, versus a restated loss of R52,3 million in the comparative period, is demonstrated in earnings per share of 16,6 cents. The improved cash flow from operations, cash released from working capital, reduced capital expenditure and cash inflows on disposals enabled the Group to considerably reduce gearing to 6% from a comparative 30%.
Among the key features of the interim results, was the R125 million net cash flow from the sale of non-core assets on which the fair value had been realised. An increase in cash of 89% was generated by operations. The EBITDA margin at continuing operations increased to 8,9% from 8,1% with the net working capital cycle at 30 days.
The turnaround strategy has resulted in a strengthened platform for a smaller group servicing relatively defensive packaging categories. Currently, the business is split approximately 60/40 between moulding and thermoforming.
The results achieved are in spite of Astrapak experiencing delays on a multi-year contract for a major international customer in the personal care market as a result of design changes and technically demanding specifications. The benefits from this contract will be seen in the second half of the financial year.
Said Moore: “Initiatives including disposal of assets, consolidation of manufacturing facilities and new investments emphasise the strategic purpose of reengineering Astrapak as a streamlined specialist in moulding and forming plastic packaging technologies.”
The Group manufactures for customers in the relatively defensive categories of personal care, toiletry, dairy, spreads, catering, confectionary and automotive lubricants.
As previously advised on SENS Astrapak’s prospects are bright with “a significant new multi-year supply agreement with a large multinational FMCG customer”.
Further cash inflows in the second half associated with sales of assets are anticipated, which should result in a pro forma ungeared statement of financial position. The board will then assess appropriate use of surplus cash.
Click here to view the Summarised unaudited interim results for the six months ended 31 August 2015.