Pact share price slides despite Woolies recycled packaging deal

What is this new partnership all about?

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Key points

  • The Pact share price is in the red today 
  • The recycling company will supply sustainable packaging for Woolworths from recycled plastic 
  • The deal involves a multimillion investment in local recycling and manufacturing 

The Pact Group Holdings Ltd (ASX: PGH) share price is in the red today despite a planned partnership with Woolworths Group Ltd (ASX: WOW).

The recycling company's share price is down 0.96% so far today, currently trading at $2.07. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.16% higher in late morning trade.

Let's take a look at the deal between Pact and Woolworths.

Pact to work with Woolworths

The two companies are planning to work together to replace 18,000 tonnes of new plastic with local recycled plastic each year. This is forecast to reduce carbon emissions by 25,000 tonnes.

Pact will supply sustainable packaging made from recycled plastic for Woolworths products including milk bottles, meat trays, and drink bottles.

The partnership involves a multimillion investment in local recycling and manufacturing, according to the companies.

Pact CEO and managing director Sanjay Dayal said consumers and businesses are demanding recycled and recyclable plastic packaging. He added:

Plastic packaging that is designed effectively, that is recyclable and recycled properly in Australia can be used again and again, creating a truly local circular economy for plastics.

Woolworths uses recycled plastic when there is no viable alternative to plastic. Further commenting on the plan, Woolworths format and network development managing director Rob McCartney said:

We're working hard to remove plastic from packaging like our bakery trays, however it can be necessary to protect quality and food safety in some products – which is why replacing it with recycled plastic is the next best thing.

Pact share price snapshot

The Pact share price has lost more than 41% in the past year, while it has fallen 18% year to date.

In the past month, Pact shares have leapt nearly 9%.

For perspective, the benchmark ASX 200 index has shed about 8% in the past year.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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