Pact Group Holdings Announced 2019 Half Year Results – Stock plummeted by 17% on ASX


The Richmond, Australia-based Pact Group Holdings Ltd (ASX: PGH) operates as a manufacturer and supplier of rigid plastic and metal packaging services across Indonesia, Singapore, Thailand, Hong Kong, South Korea, Nepal, India, China, New Zealand, Australia etc. Recently, the company restructured its operating model from the previous two business segments comprising Pact Australia and Pact International into three as Packaging and Sustainability; Contract Manufacturing Services; and Materials Handling and Pooling.

On 20 February, The Group released its results for the Half Year ended December 31st, 2018. As per the figures posted, the revenue for the half year increased by 13.3% to A$915.4 million as compared to A$ 808 million in the prior corresponding period, mainly resulting from the acquisition of the Asian packaging operations, excluding Japan, of the Closure Systems International and the Guangzhou China facility of Graham Packaging Company and TIC Retail Accessories. Even though, the impact of higher pricing, incorporated due to higher input costs, was mostly offset by lower overall net volume, the volumes for contract manufacturing were stronger, largely due to increasing demand in the health and wellness sector.     [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

An EBITDA of A$ 110.1 million was recorded for the period, down 8.7% by A $ 10.6 million on the prior period on account of lags in recovering extensively higher raw material prices in both the Australian packaging and contract manufacturing businesses along with a major increase in energy cost in Australia. However, earnings were positively affected by the contribution from the Asian and TIC acquisitions. Besides, the EBIT for the half-year stood at A $ 69.5 million, down 19.9%, by A $ 17.3 million on the prior corresponding period, primarily due to the earnings as mentioned earlier accompanied by large depreciation and amortisation from acquisitions, growth initiatives, operational excellence as well as capital investment in efficiency projects. The EBIT margins were at 7.6%, which is also 3.1% pts lower than the prior period.

An NPAT of A $ 35.7 million was also posted for the half-year, down on A $ 50.5 million in the prior period. The company also reported asset impairment expenses of around $ 368.8 million, reflecting the nature of the then trading conditions and a moderated long-term outlook for Australian packaging assets. The statutory net loss after tax for the half year was at A $ 319.6 million, way down on the net profit after tax (NPAT) of A $44.1 million recorded in the prior corresponding period.

Also, the restructuring of the operation’s model cost the company around A $ 34.2 million recognised in significant items and mostly related to the packaging network redesign. The net financing costs for the half year stood at A $ 18.9 million, a rise of A $ 2.8 million on the prior period stemming from the impact of higher average net debt in the half year.

Pact Group Holdings has a market capitalisation of AUD 1.07 billion with approximately 343.99 million outstanding shares. On Wednesday, February 20th, 2019, the PGH stock closed the trading session at a market price of AUD 2.580, plummeting by 17.042%, indicating an intra-day loss of AUD 0.530. Around 7.49 million volume of shares were traded in total.


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