Difficult trading environment impacts on Transpaco’s results
JSE-listed paper and packaging producer Transpaco witnessed poor trading conditions and reduced consumer spend during the financial year ended June 30, but still declared a 50c a share cash dividend to be paid out of income reserves, resulting in total dividends of 80c a share for the period.
The difficult operating environment, in addition to a three-month plastic industry strike, also resulted in a decline in Transpaco’s overall performance for the financial year.
Headline earnings a share decreased by 42% year-on-year to 172.3c, while earnings a share decreased by 41.8% to 173.8c.
Operating profit was down 35.4% year-on-year, despite a 15.3% increase in revenue. The higher revenue was the result of the inclusion of Future Packaging for the full-year period.
Additionally, the group’s challenges were further exacerbated by the ongoing antiplastic debate, as well as the unfavourable sentiment towards retail plastic bags, the company lamented on Wednesday.
In this respect, Transpaco said it was “actively engaging” with all interested parties, including the Department of Environment, Forestry and Fisheries, as well as retail shopping mall landlords, retailers and environmental bodies, in an effort to dispel misconceptions relating to the “overstated impact [that] retail plastic bags have on the environment”.
Transpaco has started manufacturing retail shopping bags from compostable materials as an alternative solution to traditional retail plastic bags amid the unfavourable sentiment and said that it was “exploring the viability of establishing a retail bag production facility to manufacture bags from two alternate materials”.
Strategic acquisition opportunities, when identified, would be pursued, Transpaco added.
The company’s paper division, meanwhile, was also negatively impacted on by economic difficulties.
Cash generated from operations decreased to R124.4-million for the company, while efficient working capital management reduced net interest paid and resulted in Transpaco’s net interest-bearing debt-to-equity position being restricted to 10.5%, while maintaining its balance sheet.
With the South African trading environment expected to remain difficult, Transpaco on Wednesday said its management team would continue advancing its business strategy of maintaining strict financial control and generating revenue growth.
Further, Transpaco Cores and Tubes has entered the paper straw market with the establishment of a dedicated straw production facility, the company said.
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