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Pro-Pac posts loss despite revenue gain

Wednesday, 29 August 2018
By Jake Nelson

Pro-Pac Group’s revenue jumped 62 per cent in the 2017-18 financial year, aided by major mergers and acquisitions. However, citing increased raw material costs and the drought, the company posted a loss of $5.13 million.

Opportunity: Grant Harrod, Pro-Pac.

Revenue increased to $371.5 million during FY2018 from $229 million, the gain coming mainly from the acquisition of Integrated Packaging Group. On a stand alone basis Pro-Pac itself saw sales increase to $242 million, up by $13 million or five per cent on the previous year.

The company’s EBITDA rose by 32 per cent to $16.1 million, thanks to increased volumes in industrial, food processing and beverage markets; however, profit plummeted 202 percent falling to a $5.13 million loss.

Rigid Packaging grew by three per cent to $70.7 million from $68 million, while Industrial and Flexible Packaging grew from $176 million to $322 million with the IPG takeover.

For the coming year Pro-Pac says it will benefit from a strong outlook in the fresh and dry foods, industrial and logistics, cotton and beverage markets.

However the group expects the ongoing drought to continue to impact grain bag and silage wrap volumes in 2019; resin prices are also forecast to keep rising alongside the falling Australian dollar, which the company says will impact on its short term margins.

In 2017-18, Pro-Pac’s merger with Integrated Packaging Group, as well as its purchases of Polypak and Perfection Packaging, provided the company with a platform into the high-growth flexible packaging sector, according to Grant Harrod, CEO, who said “Pro-Pac has an opportunity as both manufacturer and distributor to grow these markets. Whilst FY2018 was a year of substantial change and cost, we are transforming PPG into a resilient diversified business, servicing higher growth markets that will help drive a more sustainable earnings profile.

“We are now positioned to increase sales into new markets including fresh & dry food packaging that have a more attractive growth profile as they require local processing, underpinned by increasing consumer demand for product freshness and unitisation,” he said, adding that manufacturing and distribution sites will also be consolidated across the group, creating additional savings. The company projects an EBITDA of $37 million to $42 million in the 2019 financial year.”

For the coming year Pro-Pac says it will benefit from a strong outlook in the fresh and dry foods, industrial and logistics, cotton and beverage markets.

Former Australia Post CEO and bete noir of the printing industry Ahmed Fahour has resumed his role as non-executive chair after a stint as chairman.

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