Pro-Pac’s recycling plant in Albury, Wodonga.
Pro-Pac Packaging results for the half-year that ended 31 December 2023, reflect flexibles and specialty packaging suffered from the impact of difficult trading conditions and reduced consumer spending, resulting in lower volumes compared to the previous period for the business.
A statement from the company said business remained ‘volatile’ and ‘challenging’ as it battled high operating costs and the market remained soft.
Weather conditions in Australia and New Zealand impacted the company’s agricultural sales volumes, and the war in the Middle East has hurt logistics, customer sentiment and export sales in the region.
Revenue from continued operations was down by 13.3% across the Group at $158.9 million during the half-year.
Flexibles and specialty
In flexibles, revenue decreased by 13.2 per cent to $124.5 million (2022: $143.4 million), reflecting the impact of pass-through of lower raw material costs (primarily resin costs) to customers due to price adjustment mechanisms built into contracts.
Specialty packaging revenue decreased by 13.8 per cent to $34.4 million (1H23: $39.9 million) due to the impact of difficult trading conditions and product rationalisation to better align with targeted market segments.
Investing in circulareEconomy
Pro-Pac’s Federal Government’s Modern Manufacturing Initiative grant of $13.9m to build a $30m+ facility, targeted to be completed in Q4FY25, is a positive move forward for the business.
The first instalment was received in 2023. The grant is to establish a soft plastic film recycling plant and create a circular economy for plastic waste by developing recycled raw materials that can be used in packaging films and products manufactured by Pro-Pac and its business partners.
Kin Group, the company’s major shareholder, has committed to the role of developer of the selected site in Albury. Significant work has been done on preparing the development application, which is expected to be lodged soon, with initial building works beginning in Q4FY24. After an extensive investigation and tendering process, the required equipment has been selected, and agreements have been entered into with major suppliers.
Discussions with interested industry collaboration partners are being undertaken to establish a consortium of equity and sponsor parties to optimise feedstock collection, processing waste plastic films and the offtake of manufactured products with recycled content.
Looking forward
The group says while the trading environment remains challenged in a high inflationary market, its customer service levels have been restored to meet and exceed expectations while focusing on cost reductions.
The new printing press installed in Q3F24 will allow for more significant volumes while the business continues to invest in recycling initiatives.
The company said in light of the ‘disappointing’ January result, it expects a breakeven with an EBITDA (pre-AASB 16) for the FY24 year.
Commenting on the 1H24results, Pro-Pac’s CEO andManaging Director John Cerini said, “Our revenue for the half year was $158.9 million, 13.3 per cent lower than the corresponding period of $183.3 million.Nevertheless EBITDA (pre AASB16) was $1.2 million versus $(0.8) million for 1HY23. We continue to build on the improved service quality, delivery and the ease of doing business.”
