The group said the consumer economy had remained under pressure and demand had softened in most markets served by the group. Faced with these challenges - high material input costs and margins under pressure - competition among converters had continued to be fierce.
Industry-wide strikes during July 2011 also affected the majority of the group's operations, followed by industrial action at a number of the group's major customers into August 2011.
"The supply of polymers was problematic and had a negative impact on the business through stock outs followed by overstocking, in some cases at higher prices.
"The more rapid introduction of the group's strategy to reduce the Flexible footprint was achieved however at once off significant costs. In total five operations were either discontinued, merged or reduced in size in the second half of the financial year," Astrapak explained.
It added that a thorough assessment of the useful life and competitiveness of the group's asset base was conducted. While benefits were recognised as a result of reworked estimates in certain instances, additional impairments were accounted for.
Management recognised that much greater effort was required in the areas of asset utilisation, anticipating and adapting to the changing market conditions and working capital management in general.
"These will become areas of focus for management during the current financial year," the group added.
Turnover from continuing operations at R2.518 billion (2011: R2.434 billion) increased by 3.4% against the comparative period, mainly as a result of a 4.5% increase in average selling prices.
The gross profit decreased by 4.9% to R515.8 million (2011: R542.3 million).
"To this end Astrapak has placed increased emphasis on becoming more productive with new equipment and utilising efficient formulations as input price increases are difficult to pass on in this competitive market," Atrapak said.
Looking ahead, the group said it was expecting that the challenging market conditions would remain over the next financial year. As such, management would continue to drive the strategic objectives, with an immediate focus on extracting value from the investments in the Flexible Division and improving returns on the entire Group's asset base.
"Transformation, training and development of staff remain fundamental to achieving our objectives and this, together with cost competitiveness, volume growth, mix improvement, optimal capital allocation and working capital controls will remain a core focus," the group added.
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