Press Room

Transpaco Beats Rising Costs And Inflation To Continue Growth

19 April 2010

Unprecedented escalation in raw material and fuel costs, high interest rates and rising inflation did not hamper growth at JSE packaging manufacturer and recycler Transpaco.  The group continued to post healthy increases in turnover and profitability for the year to June 2008.  Good organic growth and efficient management of operating costs resulted in a 35% increase in operating profit, which exceeded the 33% increase in turnover. 

Growth initiatives including a more than R100 million investment in plant over the past two years, began to benefit the group particularly in the second half of the year.

Turnover grew to R720,2 million from R542,6 million and operating profit to R52,5 million compared to R39,0 million.  As a result cash generated from operations rose five-fold to R61,7 million from R12,6 million.  Net profit was up by 16,5% to R25,6 million.  However, with more weighted shares in issue during the year due to the take-up of share options, growth in EPS and HEPS was restricted to 11,2% and 10% respectively – EPS grew from 83,5 cents to 92,9 cents and HEPS from 83 cents to 91,3 cents.  CEO Phillip Abelheim says the strong growth in HEPS in the second half of the year sets the group on track for continued growth. 

Transpaco declared a final dividend of 18 cents a share.  This takes the total dividend for the year to 28 cents, 12% higher than 25 cents for 2007.

Abelheim says the Packaging and Flexibles divisions particularly, showed strong organic growth. “The Packaging division benefited from an aggressive marketing strategy.  The division is successfully increasing market share in existing areas of operation as well as diversifying into new markets.” 

The inclusion for the full 12 months of the Cape-based retail plastic bag operation was the primary driver of growth in the Flexibles division.  Transpaco is the country’s largest manufacturer of retail plastic bags. Abelheim says the factory is fully operational and running well following restructuring and improvement in efficiencies. “The factory, which was virtually dormant when acquired in December 2006, has been successfully re-established and is achieving excellent production levels. Our production of retail carrier bags has completely replaced our imports.” He continues: “We are reaping the benefits of an expanded manufacturing and distribution operation in this market.”

At Specialised Films - the group's pallet stabilisation division - new plant substantially bolstered production capacity to increase Transpaco’s market share, which Abelheim says has grown significantly since the operation was founded.

Britepak is the group’s manufacturer of printed folded cartons.  The operation will also benefit from new plant which will improve efficiency and boost capacity to take advantage of developments in the pharmaceutical industry. Abelheim is confident this will lead to a greater share of the market from new and existing customers.

He points out that the excessively high cost of virgin raw material is working to the advantage of the Recycling division as plastic manufacturers increase their usage of recycled material. At the same time the supply of post-consumer plastic waste, the main raw material of this division, continues to improve.

Abelheim says organic growth across all divisions will continue in the year ahead.   “The group will also pursue appropriate acquisitions to enhance existing operations and expand its product offering,” he concludes. 

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