Pact Group has entered into sustainability-linked loans as it seeks to improve its performance in sustainability and make innovative changes.
During the company’s 2022 Annual General meeting, Pact Group CEO and managing director Sanjay Dayal said in a first for an Australian-based manufacturing company, the business has reached an agreement to convert $420 million of existing loan facilities into sustainability-linked loans.
Under this agreement, Pact will receive loan margin benefits if annual sustainability performance targets are achieved, and a margin penalty if it underperforms.
“The sustainability performance targets cover the level of recycled content across our packaging portfolio, the amount of recycled material we process and distribute, our scope 1 and scope 2 greenhouse gas emissions, and targets to eliminating the gender pay gap,” he said.
“We have made great progress in all of these areas, and we are committed to continuing the journey. We are confident we can achieve these targets and that is why we have entered into these sustainability-linked loans.”
In addition, Dayal provided an update to its 2025 End of Waste Promise, saying it aims to eliminate all non-recyclable packaging and offer 30 per cent average recycled content across its plastic packaging portfolio.
He said the company is well progressed toward this goal, that will see Pact investing $75 million over the next three years, to install new technology and equipment with the capability to increase the recycled content in products including milk bottles, food packaging, mobile garage bins and industrial packaging across its Australian network.
Pact Group also revealed its earnings for the FY22 financial year, reporting a revenue of almost $1.84 billion, up four per cent from the previous corresponding period.
However, its reported NPAT for the financial year was $12 million, from $88 million in the previous corresponding period, and its underlying NPAT was $70 million, down from $94 million in the previous corresponding year.
The company reported an underlying EBIT of $156 million, which it said was in line with guidance. This was down from $183 million in the previous corresponding period.
“During the 2022 financial year, we experienced unprecedented volatility in demand, in the markets in which we operate, as a result of the COVID pandemic. In addition, we saw significant disruption in both domestic and global supply chains, the scale of which we have not experienced before,” Pact Group chairman Raphael Geminder said.
“In this context, I am very proud of the way our teams have worked together to respond to these factors, and with the financial results that we have delivered.”
Pact Group CEO and managing director Sanjay Dayal provided some detail on the progress that the company has made towards its sustainability strategy.
He said in a first for an Australian-based manufacturing company, the business has reached an agreement to convert $420 million of existing loan facilities into sustainability-linked loans. Under this agreement, Pact will receive loan margin benefits if annual sustainability performance targets are achieved, and a margin penalty if it underperforms.
“The sustainability performance targets cover the level of recycled content across our packaging portfolio, the amount of recycled material we process and distribute, our scope 1 and scope 2 greenhouse gas emissions, and targets to eliminating the gender pay gap,” he said.
“We have made great progress in all of these areas, and we are committed to continuing the journey. We are confident we can achieve these targets and that is why we have entered into these sustainability-linked loans.”
Pact Group said moving forward, it aims to deliver value from the circular economy of at least $25 million of EBIT, with the run rate achieved by the end of FY25.
