Transpaco turnover rises to R1bn

The company says it saw turnover rise 11%‚ exceeding the R1bn mark for the first time. It attributed this mainly to its "proactive marketing and sales performance".

But the group also says margins were pressured by spiralling energy costs‚ intensified competition‚ and higher raw material prices‚ which required it to change its suppliers.

"We are pleased with our performance (in) a challenging year‚" CEO Phillip Abelheim said on Wednesday.

He said the group was concentrating on operating efficiencies‚ including exercising tight control of overheads and working capital management.

Strikes in July and August last year also hit Transpaco's markets well into the second half of the year‚ Mr Abelheim said.

Headline earnings per share fell 3.9‚% on last year‚ but diluted headline earnings per share were up 2.8 % to 201.1c.

The group said cognisance must be taken of the 3.3-million additional shares issued during February last year‚ after the company's empowerment shareholder converted its cumulative voting preference shares into ordinary shares.

In the absence of the additional shares in issue‚ HEPS would have increased by 3.1% to 221.7c compared with the previous year.

Operating profit in the paper division increased‚ but market conditions in plastics caused margin squeeze‚ resulting in a fall in operating profit in the division.

The group also invested R24m in new plant and equipment in the plastics division‚ adding up to six years of new production capacity to its pallet wrap line.

But it said this also helped the division's profits decline.

However‚ it said the negative impact effect of the investment would be short-lived‚ as production of pallet wrap was one of the fastest growing product lines in the flexible plastics business globally.

While Transpaco said working capital remained "well-managed"‚ this was hit by the need to replace "uncompetitive domestic raw material suppliers" with international producers.

This meant the importation of raw material extended lead times‚ resulting in the need to increase inventory.

However‚ the group said its net interest-bearing debt to equity position remained cash positive‚ and interest cover had doubled to 67.8 times in the year.