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08 April 2010
JSE-listed manufacturer and distributor of plastic and paper packaging products, Transpaco, posted an R54-million operating profit in the half-year ended December 2009.
The group successfully countered a 4,4% decline in turnover, owing to a drop in the global pricing of plastics raw materials, by increasing sales volumes.
Transpaco also reduced its interest payments by almost R6-million, using its cash flow, which together with the strong bottom line, slashed gearing to 6% from 53% at December 2008.
The group experienced organic growth in both its divisions and strong cash generation through, focus on working capital, with earnings a share and headline earnings share rising by 18% year-on-year.
Transpaco CEO Phil Abelheim attributed the group's ongoing growth to the continued spotlighting of cost control, the use of assets and working capital management. "There is no magic formula for overcoming a harsh economy. Growth is sustained by concentrating on business basics, watching expenses, driving sales and sweating our machinery and plant for maximum productivity. Transpaco is also continuing to reap the benefits of the growth strategies put in place during previous periods."
The results saw the declaration of a 25c a share interim dividend, up 52% on the same time last year.
Abelheim said that while the dividend reflects the group's performance, the extraordinary rise was not a precedent setting move reflecting a change in the group's dividend policy.
"The board took a strategic decision to reduce the disparity in prior years between interim and final dividends. However, our dividend policy remains prudent and we will maintain the same dividend cover year-on-year when averaged across the whole year."
He was optimistic going forward and anticipated an improvement in trading conditions to year-end in June 2010. He concluded that the group would carry on pursuing acquisitions in related niche markets to augment future growth and bolster returns for shareholders.
By Loni Prinsloo
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