Astrapak Limited’s Annual Results Presentation to shareholders and analysts was held at The Maslow Hotel in Johannesburg on Wednesday 20 April and The Southern Sun Newlands Hotel in Cape Town on Thursday 21 April 2016.
At Astrapak we have demonstrated since the commencement of our “Charting a New Course” business improvement strategy in 2013 that the achievements and progress made would not be possible without a Team of people who “do things”.
The year ending 29 February 2016 brought to a close a much-improved underlying performance, however there is still progress that must be made going forward. What is important to note is that the past period’s accomplishment does provide a stable platform for Astrapak to continue striving towards longer-term goals notwithstanding market conditions experienced for almost a decade.
The Board and Executive Management are firmly committed to the strategic turnaround of the company and significant strides have been made, which do not yet reflect in the statutory results, but are the basis of the future of Astrapak. What is evident is there is “less noise” in this year’s results relative to previous years due to the completion of our considerable consolidation and re-engineering initiatives. These are now behind us and physical rationalisation of our manufacturing operations and footprint is complete.
Intensified customer engagement and our success through major projects aligned to customer requirements have already begun to differentiate Astrapak in our core markets – being food, personal care and lubricants.
Results still reflect excess expenses deliberately incurred to facilitate this restructuring and recovery even though projects launched to exit non-core assets are almost complete.
The headline financial features of the year show an increase in revenue by 4,8% to R1,348 billion (like-for-like with discontinued operation Hilfort excluded from the base); proceeds from the sale of non-core businesses and the disposal of assets yielded R176,6 million during the year. Underlying operating profit from continuing operations improved by 42,5% to R47,2 million from R33,1 million in 2015.
Astrapak CEO, Robin Moore, provided perspective on 2016 and beyond. “We have identified potential annualised savings of R81 million in three key areas that will improved results going forward – namely
- HO costs – R30 million associated with the turnaround
- Once off costs relating to the rationalisation and consolidation – R16 million
- Returns from recent capital investments – R35 million
This will allow the Group to meet its medium term aspirations of delivering benchmarked returns of EBITDA from 12-15% and operating profit margins from 7-10%.
What is also very positive is that additional cash flow derived from further disposal of assets already identified and with a carrying value of R269 million will further strengthen the balance sheet. These are critical factors that play a role in the Group’s intention to recommence ordinary dividend goals and review its capital structure for the future.
Our capital spend programmes have been reigned in over the last three years and have been a lot more focused – with R32 million spent on safety upgrades, R70 million on footprint optimisation and rationalisation and R200 million spent on supporting key contracts with multinational customers.
“We have restructured and cleaned up the footprint and balance sheet of the Group – notwithstanding the significant cost and risk associated with these actions,” said Mr Moore. “We have repositioned ourselves to focus on Moulding and Forming technologies with a strong customer base which forms a solid platform for future growth and expansion. We said it would take five years to reach optimal performance and we have just completed year three. In a fundamental repositioning and change process such as we have gone through, it is inevitable that you will miss the odd deadline. However I believe we have shown a very positive improvement in our underlying performance, which confirms that we are on track to deliver the performance targets that we have set for ourselves.”
Click here to view detailed information in the Astrapak Annual Results Analyst Presentation for the year ended 29 February 2016.