Posts Tagged ‘Colorpak’

  • Colorpak takes 10% sales revenue hit

    Colorpak is reporting a 10 per cent drop in its sales revenue for the financial year ending June 2013, with the company pointing to the loss customers overseas and the withdrawal from unprofitable contracts.

    The trans-Tasman packaging solutions company published its financial results for the year on 5 August, recording a 10.4 per cent fall in sales compared to the previous year to A$171.7 million, but also reporting an 8.8 per cent rise in earnings before interest and tax (ABITDA) to $18.2 million.

    The company’s operating cashflow dropped by 21.3 per cent to $13.5 million for the year, while its net equity rose to $71.9 million from the previous year’s $67 million.

    In a statement to shareholders, Colorpak said that the 10.4 per cent reduction in sales revenue was due to: “exiting unprofitable contracts and lost customers offshore.”

    However, given the company’s rise in earnings despite its fall in operating cashflow, it seems the consolidation and acquisition activity it has embarked on over the past two years is paying off, undertaking a major restructure in 2012, which saw much of its acquired Carter Holt Harvey footprint consolidated into its existing operations.

    Colorpak announced at the end of July it was consolidating its Victorian folding carton plants after securing an early termination of the old Carter Holt Harvey site lease in Mt. Waverley. It plans top spend around $24 million to close the site and relocate the operation into its Braeside facility.

    “Following the rationalisation of its manufacturing footprint in NSW and Victoria, a leaner stronger, more competitive Colorpak is emerging,” said Alex Commins (pictured), Colorpak managing director.

    Prior to the Victorian consolidation, the company also combined its NSW footprint, rolling much of its Villawood operation into its Regents Park facility.

    With its consolidation comes new investment, with Colorpak spending on new capital equipment, purchasing a new Roland 700 six-colour press, due for commission at its Braeside site before the end of this year and a new HP digital press ordered for its Flexibles site in NSW, also expected to be commissioned this year.

    In a statement to shareholders, Colorpak said:

    The Braeside facility will be the largest, most modern site of its kind in Australia upon completion of the integration in April 2014. 

    EBITDA margin grown by 1.9 per cent to 10.6 per cent reflecting positive changes following acquisition.

    A number of key customer contracts have been re-negotiated during the year on more favourable terms than were assumed in the CHH acquisition.”

    Despite seeing positive returns from its reduced exposure to post-Carter Holt Harvey acquisition-related expenses and lease expirations, the company claims it is still being impacted by the softness in the retail sector, and could see ‘more modest wage outcomes from May 2014.

    In the 12 months leading up to its end of year result, Colorpak reduced its employee headcount from 702 to 668.

    For Commins, the year’s financial results reflect the company’s ‘continued progress against the backdrop of manufacturing headwinds’.

    “Colorpak has maintained its commitment to be the most efficient, high quality supplier in the folding carton sector, concentrating on market segments which generate sustainable returns,” said Commins. “Our compound sales growth over the past 10 years has averaged 13.5 per cent per annum which is testament to the long term strategy of the company and the dedication of the Colorpak team to provide the best service to customers.”

  • Government protects small print players with late payment review

    The Federal Government is working help protect small to medium industry players by tackling Australia’s ‘late payment culture’, calling for public feedback on its proposed Prompt Payment Protocol. 

    The federal government’s department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education released the Australian Prompt Payment Protocol Discussion Paper this month, and is now calling for industry feedback and comments on the proposed introduction of a Prompt Payment Protocol in Australia to help determine the development and implementation of the scheme.

    The move could see small to medium sized printers all over the country, as well as some larger players, protected against the cashflow problems that can arise from late payment of debts – a trend that has seen its fair share of casualties in the local printing industry.

    According to credit reporting firm, Dun & Bradstreet, 90 per cent of small business failures are caused by poor cash flow. Small businesses represent almost 96 per cent of all businesses in Australia, and many face an inherent imbalance of bargaining power when dealing with large companies.

    “Late payments between businesses have a negative impact on competitiveness,” – Gary Gray, Minister for Small Business.

    In a joint statement, Gary Gray (pictured), Minister for Small Business, and Bernie Ripoll, Parliamentary Secretary for Small Business, said: “We are pleased to release for comment this discussion paper seeking stakeholder views on an Australian Prompt Payment Protocol to help strengthen small business payment terms, cash flow and business-to-business relationships.

    “In the current economic climate, small businesses are facing the challenges of global economic uncertainty, the high Australian dollar and tight cashflow. Cashflow in particular is essential to the prosperity and health of small businesses. Late payments between businesses have a negative impact on competitiveness and increase the costs of doing business. Conversely, on time payments help businesses to unlock greater opportunities for investment to grow their business and to pursue their entrepreneurial aspirations.”

    According to the paper, a staggering $19 billion annually is locked away from businesses beyond the widely accepted 30-day payment term. The paper also says that late payment adds financial and administrative costs, reduces the potential for investment opportunities, damages business relationships and fuels business uncertainty. This weakening effect on businesses, particularly small businesses, compromises their competitiveness and survival.

    It is no secret that the culture of late payment has been endemic in the local printing industry for years, with some prominent companies going so far as to publicly include lengthy payment into its trading terms.

    In early July, Colorpak told suppliers it was instigating new payment terms that will see suppliers’ invoices from the beginning of August onwards paid 60 days from the end of month of the their lodgement – effectively up to 90 days from invoice lodgement, and well in excess of the widely accepted 30-day payment term as stated by the Government.

    To help combat the knock-on damage that can be caused by exposure to lengthy payment periods, the Protocol aims to foster a broad change in Australia’s late payment culture by establishing core principles that set the benchmark for good payment practices.

    It is targeting business-to-business late payments without introducing extra regulation. The Protocol will not only encourage companies to publicly commit to paying on time, but also enable small businesses to leverage better contracting behaviours and strengthen overall business relationships.

    The paper outlines the key design features of the Protocol that will help encourage a necessary shift in Australia’s late payment culture. It canvasses a range of implementation options to ensure the Protocol is capable of delivering real benefits to business.

    The government says it has already undertaken initial consultation with a range of key stakeholders, including peak bodies and small business groups, and hopes the paper will help generate feedback on the key design and implementation issues of the Protocol.

    To find out more about the Prompt Payment Protocol or provide feedback for the Australian Prompt Payment Protocol Discussion Paper, click here. The closing date for written submissions on the Protocol closes on 23 August 2013.

  • Colorpak calls for 15% price reduction from suppliers

    Colorpak is delivering a price-point ultimatum to its local suppliers, challenging them to meet its call for a 15 per cent price reduction in their products and services, and establishing new supplier payment terms of at least two months.

    In a letter sent to suppliers on 2 July (seen by Print21), Colorpak managing director, Alex Commins (pictured), said the company was instigating a ‘supplier challenge’ seeking a 15 per cent price reduction on existing prices from businesses that supply the company.

    The letter requested that the price reduction occur no later than 1 August this year and added that Colorpak was open to ‘any ideas’ that would help to deliver the requested outcome.

    According to Commins, the aim of the price reduction request was to help enable Colorpak to maintain its competitiveness in the Australian folding carton industry amid difficult local trading conditions.

    In the letter, Commins said:

    You will be aware that manufacturingin Australia is facing increasing pressures to remain competitive against global competition. Customers expect local manufactured prices to match cheaper imported alternatives. In a number of instances, our customers have moved their manufacturing bases offshore to secure cheaper labout and materials. This appears to be an ongoing trend.

    In addition to the call for 15 per cent price reduction from suppliers, the company is establishing payment terms that will see suppliers’ invoices from the beginning of August onwards paid 60 days from the end of month of their lodgment.

    In the letter, Commins said that the new payment terms are in response to the current economic environment as well as a ‘general trend’ from large corporate customers.

    In early February, the Australian-listed print and packaging company reported a net profit after tax of A$4.72 million for the six months ending December last year, despite recording an $11.37 million drop in revenue for the same period compared to the previous year.

    The trans-Tasman print company, which posted a net loss of $-3.23 million after tax for financial year ending June 2012, recorded a six-month revenue of $92.73 million, down from the previous year’s result of $104.1 million for the same period in 2012.

  • $30 million helps the medicine go down for Colorpak

    Colorpak is feeling the effects of the Chinese health care system following the re-signing of a five-year, $30 million packaging deal with local pharmaceutical company, AstraZeneca.

    The $30 million re-signing deal comes hot on the heels of AstraZeneca’s $80 million investment on new machinery at its Sydney plant to keep pace with rapid growth in demand for a respiratory medicine from the Chinese health care system.

    AstraZeneca’s director of manufacturing and supply, Stuart Anderson, says that, as the pharmaceutical company invests in its manufacturing ability with the aim of becoming a major export hub to Asia, the new five-year deal with Colorpak will play an important part of burgeoning growth in exports to China over the next three years.

    “Our partnership with Colorpak is an important relationship in delivering the 500 per cent growth of exports that we will experience to China by 2015,” says Anderson.

    The five-year deal represents the renewal of an existing partnership between the two companies and, according to Colorpak managing director, Alex Commins, comes with an approximate value of $30 million over the term of the agreement.

    “We are very excite to have once more extended our supply partnership with one of Australia’s blue chip pharmaceutical manufacturers,” says Commins. “This is terrific news for our stakeholders and the broader Australian economy.”

    After recording a net loss of $3.23 million for the financial year ending June 2012, it is no surprise that Commins is working to reassure Colorpak’s stakeholders with the signing of this deal.

    However, it is not the only contract the packaging company has in the lucrative pharmaceutical sector. Colorpak also holds contracts with several other pharmaceutical companies including GlaxoSmith Kline, CSL and Pfizer.