JSE-listed plastic and packaging group Transpaco’s operating profits rose 14.4% to R139-million for the year ended June 30, compared with R121.7-million in the prior year, despite selling price deflation, reduced customer spend and continued stagnant demand for recycled material.
Transpaco attributed the higher operating profits to stringent cost control, aggressive sales and marketing, as well as sound working capital management.
The company’s headline earnings increased by 12.4% to R97-million, compared with R86.3-million in the prior year, and headline earnings a share increased by 13.5% to 297c apiece.
Transpaco declared a final dividend of 90c a share, resulting in a total dividend of 135c a share, compared with 120c in the prior year.
Tanspaco CEO Philip Albelheim says all the company’s divisions traded favourably, even the plastic division, which was impacted on by price deflation.
“The anti-plastic debate continues and, in particular, the adverse sentiment towards retail plastic bags. While Transpaco is active in this market, our diversification strategy has reduced the company’s dependency on retail plastic bags.”
Transpaco is working with government, industry bodies and customers to explore suitable solutions and to mitigate against any possible negative consequences.
Meanwhile, Transpaco’s acquisition of the Future Packaging group of companies, which operates in the packaging and related products market across South Africa, in March, has enabled Transpaco’s existing distribution arm, Transpaco Packaging, to expand its product range and geographical footprint.
Although the acquisition of Future Packaging contributed towards group operating profit, the benefit was offset against nonrecurring transactional costs expensed during the year.
Transpaco will continue its proven business strategy, targeting organic growth, while maintaining strict financial control and identifying and pursuing appropriate acquisitions.