Pact Group (ASX: PGH) has ceased the sale process of its contract manufacturing businesses as a result of hurdles arising from COVID-19.
The company’s CEO and managing director Sanjay Dayal said, “I have consistently advised shareholders we would sell the business if the sale process met our value hurdle.
“Continued market uncertainty and supply chain disruption arising from COVID-19 has created challenges in realising our expectation. At this time, we believe retaining the business delivers greatest value for our shareholders.”
The company also provided a quick update on its Q1 trading, stating that in the first quarter of FY22, demand remained resilient in the packaging and sustainability, as well as materials handling and pooling segments, with higher raw material and international freight costs well managed.
However, in the contract manufacturing segment, it said demand was weaker than expected, impacted by COVID-19 lockdowns, and margins were lower due to higher input costs.
A further and more detailed trading update will be provided at the company’s AGM, which has been rescheduled from 17 to 29 November.