Pact Group share price surges higher on new CEO appointment

The Pact Group Holdings Ltd (ASX: PGH) share price has surged this morning on the announcement of Sanjay Dayal as the company's new CEO and Managing Director, effective 3 April 2019.

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The Pact Group Holdings Ltd (ASX: PGH) share price has surged 4.48% in early trade on the announcement of Sanjay Dayal as the company's new CEO and Managing Director, effective 3 April 2019.

What did Pact Group say in this morning's announcement?

The company announced that Mr Dayal will join Pact from BlueScope Steel Ltd (ASX: BSL) where he was Chief Executive, Building Products, Corporate Strategy and Innovation. Mr Dayal has previously held senior positions across Asia and Australia during his 9 years at BlueScope, and brings prior experience with Orica and ICI.

Mr Dayal has been appointed on a rolling contract, with his total remuneration including both fixed and at-risk components to ensure alignment with all shareholders.

What challenges are facing the Pact Group?

Mr Dayal joins the company after it has seen its share price plummet 20% so far this year on downgraded earnings guidance and significant asset impairments.

The company cited difficult trading conditions and a revised long-term outlook for the company's Australian businesses as it announced the recognition of non-cash impairment charges in the range of $310 million to $340 million after tax in its half year accounts.

The charges comprise $90 million to $100 million for its Australian packaging assets and $220 million to $240 million for Goodwill in Australia.

The company also reported a 9% decline in earnings before interest, tax, depreciation and amortistaion (EBITDA) for the half-year with full year guidance of $230 – $245 million (compared to $237 million in FY18).

Is Pact in the buy basket?

This morning's announcement is a big plus for the company as it looks to shore up its long-term outlook and improve its operational efficiency.

In terms of comparables, fellow Materials peers, the Orora Ltd (ASX: ORA) share price is down 2.0% while Amcor Limited (ASX: AMC) has climbed 14.8% on strong earnings and a stable growth outlook.

Given a new leadership direction and significant restructuring, I think Pact could be good value at its current market price but I would be waiting for its full-year earnings before buying.

In the meantime, those looking for something a little more interesting than packaging should check out this top-rated stock in a booming industry could give you the edge as a growth investor.

Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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