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Harrod goes on poor Pro Pac figures

Friday, 30 November 2018
By Jake Nelson

Resigned: Grant Harrod, Pro-Pac

Grant Harrod will step down as CEO of Pro-Pac Packaging just a year and a half into the top job, and John Cerini, former CEO of Integrated Packaging Group which Pro Pac bought 15 months ago for $177m, is also quitting as a full-time executive.

During Harrod’s tenure – for which he received an annual salary of $562,000 – the company lost a third of its value, its share price dropping from 35c to 22c.

Harrod acknowledged the current year’s earnings have not met expectations, and shareholders agreed – the day prior to his resignation at the AGM the company’s stock price dropped by 18 per cent.

Pro-Pac turned a $5m profit from last year into a $5.1m loss despite climbing revenues, up by $13m on the previous year to $242m on a like for like basis, and to $371m with the IPG integration.

The company is 45 per cent owned by Raphael Geminder, brother-in-law of Visy owner Anthony Pratt. Geminder also owns 39 per cent of Pact Group, which saw its managing director Michael Bundey step down abruptly in September following similar poor results.

Pro-Pac blamed the drought in regional Australia and increased raw materials costs for sending it into the red. It says the drought had a major impact on its figures because it is a major suppler of agricultural packaging, such as grain bags.

Former Salmat chief Harrod will leave his position as soon as the company appoints a suitable replacement, he said at the company’s AGM. “In the meantime I will continue to lead the Company and oversee the implementation of its growth strategy.

At the AGM Harrod said, “We have underway a diversification strategy to reduce concentration risk on volatile markets like agriculture and raw material commodities such as resin, as we broaden the business to focus further up our customer’s value chain,” he said. “These include our move into providing printing, lamination and other conversion capabilities, required by our customers in their primary packaging needs, and our focus on more resilient markets including packaged food and FMCG.

“The recent acquisitions of Perfection Packaging and Polypak, both value-add manufacturers, support this move.”

Former AusPost CEO Ahmed Fahour, chairman of Pro Pac, thanked Harrod on behalf of the Board. “Grant will leave behind a high-calibre new management team who will ensure that we can achieve our full potential,” he said.

This new management team includes Rick Rostolis, CFO, who will oversee Pro-Pac’s integration and costs improvements programme; David Chin, chief commercial officer, who will implement the company’s working capital and inventory management programme; Kathleen Forbes, company secretary and general counsel; Andrew Harris, GM manufacturing, who will commence in January; and Charles Miller, chief information officer.

Pro-Pac will retain executive search firm Egon Zehnder to find a replacement for Harrod.

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