JSE-listed paper, plastic and packaging group Transpaco increased its revenue by 12.5% year-on-year to R2.34-billion for the financial year ended June 30, on the back of material cost inflation and volume growth across the group.

Operating profit grew by 35.1% to R222.8-million in the period, while net profit after tax improved by 38.4%, resulting in headline earnings increasing by 36.9% and headline earnings a share being up by 41.4%.

Cash generated from operations increased from R189.8-million in the 2021 financial year to R214-million for the period under review, while cash and cash equivalents at year-end totalled R72.3-million – down from the R76.2-million in the prior year.

Transpaco’s net interest-bearing debt-to-equity position improved to 9.3% from 15.5%.

CEO Philip Abelheim says that, despite a negative impact on sales during July and August, as customers experienced damage to stores and warehouses as a result of the July 2021 riots, Transpaco had a good start to the period.

The financial results were ahead of the company’s expectations with double-digit growth in operating profit in both the plastic, paper and board divisions.

The board has declared a final gross cash dividend of R1.55 a share, resulting in total dividends of R2.15 a share for the financial year – up from the R1.53 a share in the year prior.

The plastic division, which operates in the retail, scholastic, industrial, refuse bag, and pallet wrap markets, exceeded expectations improving operating profit by 31%, contributing 58% of group operating profit.

The paper and board division – comprising printed folded cartons, tubular cores and general packaging – experienced a 44% increase in operating profit, improving group performance by 31%.

During the year, Transpaco repurchased shares, completed the upgrade of fire protection sprinkler systems at company-owned properties and invested in capital equipment amounting to R54-million – all of which impacted on Transpaco’s net interest-bearing debt-to-equity position.

Local and international shortages of plastic and board raw materials, compounded with shipping logistics challenges, resulted in Transpaco carrying higher-than-normal stock levels, which similarly affected the group’s net interest-bearing debt-to-equity position.

In terms of operations, during the financial year under review, Transpaco Specialised Films successfully relocated from Bronkhorstspruit to a property held by Transpaco in Johannesburg.

In this regard, the company reports that the envisaged benefits of the combination of the Johannesburg operations of Transpaco packaging and future packaging have already been attained.

With the installation of a new multilayer extruder and high-speed bag machine, the refuse bag division added capacity to accommodate local and global market expansion.

Notwithstanding a challenging year, he says the company’s strategic business approach has proven to be resilient as Transpaco looks to continue delivering positive results, while maintaining organic growth.

Nonetheless, owing to elevated energy prices, ongoing load-shedding, high fuel prices, interest rate increases and difficulties obtaining raw materials, Transpaco anticipates that trading circumstances will remain challenging in the financial year ahead.