Catering to Australia, New Zealand and Asia, Pental Limited (ASX: PTL) is a full end-to-end service provider of consumer goods. It drives the growth of its consumer brands and those that it distributes for others, by leveraging its fully integrated supply chain and FMCG expertise. The Pental products have been trusted by families for generations, and their superior quality is subject to constant innovation and improvements.
The Pental Journey
The Company has come a long way- from being a specialty chemical and soaps business that commenced in the 1950’s, into being a consumer goods powerhouse, managing brands covering household, fabric and personal care, as well as fire needs.
Currently, Pental owns a manufacturing and warehousing base in Shepparton, which has 120 employees. The modern manufacturing plants are in the hands of highly skilled operators, and the warehouse has a capacity of 8,000+ pallets. PTL has a strong New Zealand presence with strong brands and market share. For further growth, it is backed by national sales structure, field support and a robust finance team structure.
Pental in 2019
In FY19, the year which continued to see aggressive competition and price cutting in Australia’s consumer goods market, Pental continued to invest in marketing and price matching initiatives in key categories and segments. Even though PTL has foreseen the market volatility, sales grew substantially on last year in branded bleach, cleaners and firelighters, as the Company found ways to reduce production costs and better target the increasing share of private label in the fast-moving consumer goods market.
The successful addition of the Duracell distributorship (3-year distribution began September 2018), one of the world’s most recognisable brands, was instrumental in delivering the 2019 results.
On the financial end:
- $3.4 million in underlying PAT in 2019, up from $2.6 million (32.5%) in 2018;
- Net sales revenue grew by 32.7% and was $100.4 million
- The cash position remains positive with a net cash balance of $246,000 at the end of the financial year and PTL continues to be debt-free;
- The net working capital increased largely due to the addition of PTL’s Duracell distributorship. Excluding Duracell, total working capital in fact improved on prior period by nearly $1.5 million.
- The Board approved a final fully franked dividend for the 2019 year of 1.3 cps, brings the total dividend for the financial year to 2.0 cps.
On the activities/ achievement end:
- Over the past 12 months, PTL doubled down on its brand consolidation strategy to protect shelf space in tough market conditions;
- It co-branded the Lux and Martha’s brand names under the Softly umbrella to build a strong laundry care portfolio;
- Secured Huggie ranging in Woolworths;
- Replaced boilers at production facility providing energy efficiencies;
- Grabbed No.1 Position for White King Liquid Bleach, Jiffy Firelighters and Softly Fabric Care;
- Achieved ISO 9001 accreditation;
- The year marked the sixth year of Unilever partnership as exclusive Australian distributor for Pears, highly recognised international brand;
- Signed a new agreement with Chemist Warehouse, Australia’s largest pharmacy retail chain for Pears and Country Life Soap for Tradies from March 2019;
- In China, the current sales distribution partner (Silverstone), continues to grow as more opportunities are being tapped on the Asian export market;
- In Vietnam, the growth project remains underway after engaging a key distribution partner based in Ho Chi Minh City;
- In Thailand, PTL is exploring opportunities with distributors in exporting Pental Australian made products into Thailand.
PTL’s Business Scorecard (Source: PTL’s Report)
Cognisant of the tough market conditions in Australia, PTL continues to support trusted brands such as White King, Janola and Huggies. The growth of the Company’s distribution business is an integral plank of its success by delivering scale and cost efficiencies. The Company has a strong investment in the field and merchandising support, coupled with a leading innovation pipeline, as PTL protects its market share and shelf space.
The Company is focused on expanding the reach of its brands by pursuing new Australian retailers to reach even more consumers. The wider export market is an important part of the robust long-term growth vision, as South Korea, Indonesia Taiwan, Philippines and Thailand remain in focus.
To support cost control, production efficiency and growth in contract manufacturing opportunities, PTL aims to invest in replacing one of the old liquid lines at Shepparton and has already commissioned the new line at the Shepparton plant. The new line will be used for non-bleach liquids such as liquid soaps and dishwashing detergent.
On 28 November 2019, Pental announced the retirement intention of current Chairman Peter Robinson, as Chairman and a director of the Company, on 31 December 2019. Mr Mark Hardgrave would be the Chairman following his retirement.
Mr Hardgrave joined the Company in May 2019 as a non-executive director and brings to the role of Chairman more than 35 years’ experience in corporate finance, funds management and various C-suite roles.
- Presently, serving as a non-Executive Director of 2 ASX listed companies Wingara AG Limited and Traffic Technologies Limited.
- He is a co-founder and former joint MD of M&A Partners.
- Mr Hardgrave has been involved in equity capital markets, funds management, M&A in various roles at firms like Merrill Lynch, Bennelong Group, Taverners Group and Thorney Investment Group.
With this new Board amendment, a solid 2019 and an even robust outlook, Pental seems to be on the right growth trajectory. We are committed to providing insights on this huge player and encourage you to keep watching this space for more.
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is sponsored but NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. We are neither licensed nor qualified to provide investment advice through this platform.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.