Johannesburg - Packaging company Astrapak yesterday successfully turned the corner and reported a 25.4 percent increase in operating profit to R27.57 million for the six months to August as its cost cutting measures paid off.
Astrapak has streamlined its operations down from 26 to 9 to reduce losses and strengthen its balance sheet. It did not declare a dividend in the period.
It said the costs would be reduced further in the next reporting period. During the past period Astrapak closed the Johannesburg head office and moved its operations to Durban. Chief executive Robin Moore said the closure was motivated by two scenarios.
“The closure was based on cutting costs, but more importantly by the fact that most of our big clients like Unilever are based in Durban. So it made sense that we move the business to that city,” said Moore.
The performance for the second quarter improved by 49 percent as compared with the first quarter. “We are hoping to build on the second quarter momentum to achieve better results in the next reporting period,” he said.
On track
Moore said the group was on track to eliminate R30m on an annualised basis in corporate costs associated with the long-term strategy by February 2017.
Astrapak also lifted revenue by 15.2 percent to R734.27m, up from R637.64m as compared with 2015, while loss attributable to ordinary shareholders came in at R6.6m as compared with a profit of R20.11m in 2015. The company also reduced its headline loss per share by 26.6 percent to 4.7 cents per share, down from 6.4c per share in 2015.
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Ron Klipin, a portfolio manager at Cratos Wealth, said Astrapak’s results could be seen as a tale of two quarters because of a material turnaround in operational performance in the second quarter.
“New contracts from multinationals such as Unilever are starting to kick in, following substantial investments in upgrades and efficiencies. The group is now focused on foods, automotive industry and personal care and toiletries.
“From a financial point of view, the sale of non-core assets and properties, with additional asset disposals pending, will further strengthen the group’s balance sheet,” Klipin said.
Astrapak was confident of achieving a substantially better second half, despite a headline loss of 4.7c per share, with the bulk of the restructure and non-recurring costs now complete. Astrapak shares traded 1.33 percent lower on the JSE yesterday to close at R3.70.
BUSINESS REPORT