JSE-listed packaging company Transpaco on Wednesday said it had increased its profit from continuing operations by 10% to R45.3-million during the six months to December 31, despite a reduction of about R3.6-million in profit after tax, owing to unexpected industry-wide industrial action.

The company’s turnover was boosted by the contribution of Disaki Cores and Tubes, which was acquired in November 2010. Turnover grew by 21.2%, to R552.8-million.

However, headline earnings a share were down by 3.1%, as a result of 3.3-million additional ordinary shares being issued during the period. The increase was owing to Transpaco’s broad-based black economic-empowerment shareholder converting its preference shares into ordinary shares towards the end of the previous financial year.

Transpaco CEO Phillip Abelheim pointed out that there were no further preference shares in issue.

Disaki’s contribution, and stringent control of group operating costs saw operating profit from continuing operations grow by 4.2%, to R63.3-million. Coupled with a strong operational cash flow the group was able to maintain gearing at 7%.

The solid performance reflected management’s focus on innovative growth initiatives and optimising efficiencies. “Keeping a sharp focus on business fundamentals remained key to Transpaco’s ongoing growth. We concentrate on business basics irrespective of trading conditions,” he said in a statement.

He added that Transpaco’s strategy of investing in plant, equipment and information technology infrastructure had increased capacity and ensured the group’s competitiveness locally and against imports. Transpaco recently installed a third line at a cost of R24-million to increase capacity in the growing pallet stabilisation market.

Meanwhile, Transpaco closed underperforming operations during the period. “We made the decision to discontinue our weaker polyvinyl chloride and polyethylene terephthalate operations, which had enabled us to redeploy resources into exciting new opportunities,” Abelheim said.

Transpaco is currently in the process of establishing a high-volume polypropylene recycling facility, reaffirming the group’s commitment to green initiatives. “The recycling of pre- and post-consumer polypropylene will see Transpaco expanding its foothold in the recycled plastics market. Currently the group operates a substantial post-consumer polyethylene recycling division," he added.

Going forward, Transpaco was optimistic, but cognisant of the challenging economic conditions.

Transpaco increased its interim dividend by 7% year-on-year to 31c a share.

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