Johannesburg - Astrapak, which makes moulded, formed and rigid plastic packaging, narrowed its loss in the year to February as its turnaround strategy starts to pay off.
The company notes this year its focus continued to be on exiting non-core businesses and surplus assets, beginning the process of eliminating expenses incurred to facilitate recovery and executing on major projects aligned to the customer focus.
It notes this “costly” reorganisation is now mostly complete and the listed company is now focussed on “ensuring that the transformed business delivers operational performance and healthy cash flow”.
For the year to February, its overall attributable loss was R3.9 million, an improvement on the R143.3 million it reported a year ago.
This equates to earnings per share loss of 2.7 cents (comparative loss per share of 114.4 cents). Headline loss per share was 14.1 cents (2015 : loss of 71.5 cents).
Revenue was 2.9 percent down at R1.3 billion.
Read also: Cautionary sends Astrapak shares soaring
“Our operational structures have been significantly overhauled, we have made good progress on exiting from discontinued businesses and surplus assets, and have reinvested notably into servicing major customers, particularly those in our personal care lines” says CEO Robin Moore.
“This is evidenced by far fewer one-off items in this year’s financial results, as discontinued operations and closure costs are almost out the system. With a streamlined business, fewer but larger customers, and with major investments in place, we are now set to drive performance towards targeted returns.”
Moore explains Astrapak has exited its PET and Flexible divisions, and refocused the group as a moulding and forming technologies based packaging manufacturer. “Capital expenditure for the year was concentrated on being able to best service key multi-national customers with whom we have multi-year supply contracts.”
Moore notes some of the major projects in relation to large customers are, however, coming on stream later than envisaged. “So returns from our substantial capital expenditures made to service long term contracts are not reflected in current results.”
During the year, the group scored net cash of R177 million from selling assets that were not core, including East Rand Plastics, Cinqpet and Knilam.
It also continued with the rationalisation and consolidation of its factories, relocating capital assets from Bronkhorstspruit to Kwazulu-Natal operations. The Johannesburg head office is being closed, with responsibilities transferred to Durban, which it says will lead to significant cost savings in future periods.
Moore describes the remaining businesses as “delivering a mixed result, with further work necessary to bring all operations up to targeted performance. We must also highlight that the reorganisation has disrupted parts of these remaining operations.”
Gross profit increased by 3.2 percent to R301.5 million with the gross profit margin improving to 22.4 percent from 21 percent.
Earnings before interest, tax, depreciation and amortisation from continuing operations was R116.1 million, slightly lower than the R127.4 million reported a year ago.
Continuing operations recorded a loss of R17.8 million; continuing headline loss was R12 million, equating to a headline loss of 9,9 cents per share.
Discontinued operations recorded a profit after interest and tax of R14.5 million, and a headline loss of R5.1 million.
The group has not declared a 2016 ordinary dividend as operational cash flows have been reinvested into executing the turnaround strategy and to reduce debt. “We are aspirant in recommencing dividend distributions to shareholders and will do this when our reworked businesses are on track and delivering healthy cash flows, balanced against our requirements for maintenance and growth,” says Moore.
IOL