Pro-Pac Packaging Limited (ASX: PPG) has reported a statutory net profit after tax of $6.6 million, up $158 million from the previous corresponding year, for its FY20 financial year ending 30 June 2020 despite the ongoing challenges associated with COVID-19.
The company’s EBITDA was up by 15.4 per cent from last year, at $32.4 million and its net debt reduced by 44.4 per cent at $46.1 million.
However, its revenue of $478.2 million was down by 1.6 per cent from the previous corresponding period.
The company said that a “targeted and successful focus” on shifting its business mix towards higher margin products within the flexibles and rigids divisions, offset by lower revenue levels from the industrial division, resulted in the figures for FY20.
Pro-Pac Packaging managing director Tim Welsh commended the team for focusing on its growth objectives and delivering results through the pandemic.
“The growth in EBITDA and improvement in margins validates the strategic focus of shifting our business mix and growth ambitions towards the higher margin flexibles business and highlights the improvements in our operational discipline and cost reduction, with further opportunities for operational and cost improvements being pursued,” he said.
“Operationally, leveraging our existing resources and obtaining the best possible returns on our investments, remains an important priority. The closure of the Chester Hill facility and the consolidation of our production footprint will position our flexibles division well to remain a leader in the delivery of flexible packaging products and services, for all of the critical markets we serve. The move will also optimise our other flexibles sites.
“The significant improvement in our balance sheet and our focus on driving growth though operational excellence delivers a strong foundation for Pro-Pac to become an industry leader in the manufacturing and distribution of packaging products.”
In May, in line with its strategy to optimise its operational footprint and increase manufacturing capability, the company announced its decision to close the manufacturing facility at Chester Hill, NSW.
Production will be relocated to existing facilities across Australia and the transition will be completed in FY21.
The company also established a strategic partnership with global agricultural packaging company Tama Group in June, with Pro-Pac divesting its Australian agricultural forage distribution business in conjunction with signing a 10-year agreement for Tama to exclusively distribute Pro-Pac’s range of SilaWRAP film to the agricultural sector.
Moving forward, key objectives for Pro-Pac Packaging include: transitioning its production from the Chester Hill facility and the deployment of new and existing equipment to its other sites in consolidating the group’s operational footprint; and successfully delivering on its ERP project to enable business rationalisation and efficiency.
“The first two months of FY21 have started well for Pro-Pac and carried forward positive momentum with performance currently tracking ahead of prior year,” the company added.