Press Room

R100 Million Capital Investment Drives Strong Results For Transpaco

19 April 2010

Weathering tough economic conditions, JSE packaging manufacturer, recycler and distributor Transpaco Limited, outperformed the sector and delivered solid growth across all operations for the six months to 31 December 2008.  Substantial investment in plant and capacity over the past two years is yielding tangible benefits for Transpaco, which resulted in escalating organic growth.

Turnover increased by 28% to R452,2 million while operating profit rose 74,4% to
R50,8 million.  The growth in operating profit outstripping that in turnover reflected Transpaco’s enhanced productivity and efficiency, which together with strict cost control generated higher cash from operations.  As a result gearing reduced substantially from 93% in December 2007 to 53%.

Earnings per share increased 96,7% to 106 cents while headline earnings per share doubled to 105,9 cents.  In light of the group’s performance including a strong cash flow, Transpaco declared an interim dividend of 16,5 cents per share higher year-on-year by 65%.

CEO Phillip Abelheim says that the Recycling Division turned a challenging economic environment to its advantage.  “There has been a marked increase by plastic product manufacturers in the use of recycled material.” To take advantage of this opportunity the group secured a steady supply of post-consumer plastic waste, which is the primary raw material of the Recycling Division. “The shortage of waste experienced at this time last year has been successfully alleviated.  To this end Transpaco continues to assist the establishment of black-owned buy-back centres.  Members of the informal sector can profit from the sale of plastic waste.” He adds that while this certainly benefits the group, it also boosts job creation and enterprise development.

The Cape-based plastic bag factory, which was substantially dormant when acquired in December 2006, has been re-commissioned and is now operating efficiently.  This is fuelling robust performance in Transpaco’s Plastic Products Division.  Abelheim says the group currently manufactures its retail plastic bags locally with imports completely eliminated. Since the acquisition Transpaco has created 300 new jobs in the economically hard-hit Western Cape.

Britepak, which supplies printed folded cartons to the pharmaceutical industry, and pallet stabilisation film business, Specialised Films, are also performing well after the investment over the past two years in upgrading plant and equipment at both sites. “Improved and increased production facilities are enabling both operations to achieve greater market share in high–growth markets,” he says, adding that Transpaco Cores and Packaging both continued to return meaningful contributions to top-line growth.

Abelheim is cautiously optimistic that the group’s achievements will continue to drive pleasing levels of performance. He points out though that historically performance is weighted to the first half of the financial year.  “The current market may yield acquisition opportunities which make commercial sense for the group as Transpaco looks to expand into related niche markets,” he concludes.

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