The Pro-Pac Packaging Limited (ASX: PPG) share price has leapt higher today following the company's announcement of its FY20 results. The Pro-Pac Packaging share price climbed 18.75% in early trade but, at the time of writing, has pulled back to a more modest gain of 6.25%
Pro-Pac is a flexibles, industrial and rigid packaging company with a diversified distribution and manufacturing network throughout Australia and New Zealand.
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How did the company perform?
The company was pleased to announce statutory net profit of $6.6 million for FY20. It also delivered sustainable improvements in working capital and a 44.4% reduction in net debt to $46.1 million.
Pre-AASB16 (the accounting standard for leases), earnings before interest, taxation, depreciation and amortisation (EBITDA) was 15.4% higher to $32.4 million compared to the prior corresponding period (pcp).
Revenue of $478.2 million was down 1.6% on the pcp as a result of shifting the business mix towards high margin products. However, it was offset by lower revenue levels from the industrial division.
Pleasingly, Pro-Pac Packaging was able to reinstate a fully franked dividend of 0.4 cents per share.
In March, the group announced the successful refinancing of its senior debt facility for a further 3 years.
"Proud"
That's the word Pro-Pac CEO and Managing Director Tim Welsh used to comment on the FY20 results. He said "I am proud of how the Pro-Pac team has continued to focus on our growth objectives and delivered a set of strong financial results despite the ongoing challenges of the COVID-19 pandemic,"
"The significant improvement in our balance sheet and our focus on driving growth though operational excellence delivers a strong foundation for Pro-Pac to become an industry leader in the manufacturing and distribution of packaging products," he concluded.
Outlook
Pro-Pac Packaging describes FY21 as a year of consolidation, as it delivers on critical transformational projects that will drive a step change in its cost base in FY22 and beyond. The company also highlighted the importance of this transformation to its manufacturing capability and ability to address new markets.
Key objectives for the coming 12 months include transitioning production from Pro-Pac's Chester Hill Facility and the delivery of the enterprise resource planning (ERP) project to enable business rationalisation and efficiency.
Pleasingly, the company has advised the first two months of FY21 have started well and carried forward the positive momentum from FY20. It has advised a business update will be provided at the annual general meeting (AGM) in November.
About the Pro-Pac Packaging share price
The Pro-Pac Packaging share price is currently trading at 17 cents per share which is 183% higher than its March low. The Pro-Pac share price has increased nearly 42% in year-to-date trading.
