Pact Group share price rises higher on 1H20 earnings release

The Pact Group Holdings Ltd (ASX:PGH) share price ended 1.63% higher today following the release of the packager's half-year results.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Pact Group Holdings Ltd (ASX: PGH) share price ended 1.63% higher today following the release of the packager's half-year earnings result.

Pact Group is a provider of specialty packaging solutions, servicing both consumer and industrial sectors throughout Australia, New Zealand and Asia.

Challenging market conditions see a decline in revenues

Pact Group's revenue for the half-year came in at $885 million, 3.3% lower than the $915 million achieved in the prior corresponding period (pcp). The company commented that lower overall net volumes and lower pricing were partly offset by favourable foreign exchange translation benefits.

Pact Group recorded a statutory net profit after tax of $35 million for the half-year, which included a significant gain after tax of $2 million. However, excluding the impact of the adoption of AASB 16, net profit after tax before significant items came in at $37 million, up 4% compared to $36 million in the pcp.

Earnings before interest, tax, depreciation and amortisation (EBITDA) of $145.4 million came in $35.3 million higher than the pcp, including a positive impact of $32.8 million from the adoption of AASB 16.

Pact Group said there will be no interim dividend this period, with cash to be retained to fund strategic initiatives and reduce debt.

Segment review

The company's growth in the Materials Handling and Pooling segment was driven through the expansion of crate pooling operations in Australia.

The company noted that its Packaging and Sustainability volumes continued to experience challenging trading conditions in a number of sectors. This more than offset modest volume growth experienced in New Zealand and Asia.

Pact Group also noted that contract Manufacturing Services volumes were significantly lower in its health and wellness sector, and also softer in the homecare and personal care categories.

Outlook for the remainder of FY20

Commenting on FY20, Pact Group acknowledged that the potential impact on sales and supply chains from further disruption related to the coronavirus outbreak and other macro-economic factors is uncertain at this time.

The company went on to state that the outcome of the proposed sale of Contract Manufacturing Services, along with its impact on FY20 earnings, is not yet known.

Excluding Contract Manufacturing Services, Pact Group expects EBITDA from its continuing operations for FY20 to be generally in line with FY19, subject to global economic conditions.

Motley Fool contributor Phil Harpur 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.

More on Share Market News

a smiling young woman carrying a pile of books, indicating a lifting share price for book sellers
Share Market News

Here's how the ASX 200 market sectors stacked up last week

ASX utilities shares led the 11 market sectors for a second consecutive week.

Read more »

Animation of a man measuring a percentage sign, symbolising rising interest rates.
Share Market News

Here's when Westpac says the RBA will cut Australian interest rates

Are interest rates coming in 2024 or 2025?

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A young boy sits on his father's shoulders as they flex their muscles at sunrise on a beach
Opinions

Where I'd invest $10,000 in ASX growth shares right now

These are my top picks for growth.

Read more »

A man with his back to the camera holds his hands to his head as he looks to a jagged red line trending sharply downward representing the ASX tech share sell-off today
Share Market News

How likely is a stock market crash in 2024?

Stock market crashes are a painful, but inevitable, part of investing.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Resources Shares

Goldman Sachs says this ASX 200 mining share is in for a 33% whack

The top broker predicts a fairly miserable 12 months ahead for this diversified miner.

Read more »

A woman wearing a top of gold coins and large gold hoop earrings and a heavy gold bracelet stands amid a shower of gold coins with her mouth open wide and an excited look on her face.
Opinions

I believe this ASX 200 stock can DOUBLE its profit in 5 years

This stock has enormous profit growth potential in my eyes, here’s why.

Read more »

Top ten gold trophy.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors endured a sour end to the trading week today.

Read more »