While JSE-listed packaging firm Astrapak’s results for the six months ended August 30, were mediocre, it was in line with company expectations, as Astrapak was instituting significant changes in a difficult market, CEO Robin Moore said on Monday.

Speaking at a presentation of the group’s results, in Johannesburg, he stated that the company’s two-year recovery strategy was timely and necessary and that the company had made significant progress in this regard.

“Our two-year recovery programme began at the start of this financial year and, although performance over the review period was subdued and trading conditions difficult, in key respects, our figures reflect progress somewhat ahead of expectation,” he said.

During the first half of the year, Astrapak’s revenue from continuing operations rose 1.2% to R1.22-million, representing a 5.4% volume decline and 6.6% average selling price increase. Gross profit, adjusted for the costs associated with the fire at the group’s East Rand Plastics business, fell 5.7% to R252.3-million.

The group’s net debt had been reduced during the period from R471-million previously to R248.5-million, which reflected meaningful progress in Astrapak’s turnaround strategy, MD Manley Diedloff said.

Further, while headline earnings a share, at 10.7c, were down 51.2% from the previous corresponding period, it was still substantially better than what was budgeted for, he added.

Meanwhile, Astrapak’s rigids division saw 15% growth in volume to 25 550 t, while its flexibles division saw a 33% decline to 10 997 t.

“The decline in flexibles volumes is a consequence of the damaging and disruptive fire at East Rand Plastics earlier in the calendar year and a deliberate decision to exit certain businesses as part of the flexibles strategy,” Diedloff said.

Meanwhile, costs from continuing operations fell 32.2% to R10.2 million, while net cash from operations increased to R333.5-million, boosted by insurance proceeds.

No dividend was declared.

Looking forward, Moore stated that Astrapak expected an improved result for the second half of this year.

He said that, while trading conditions were expected to remain challenging, the normal seasonal pattern of second-half cash collection would be beneficial.

“The recovery strategy is gaining traction. Loss-making operations receive focused management attention and we are positioning ourselves to derive benefit from a leaner flexibles operation in the future,” he said.

“We continue to streamline our business and will pursue our financial objectives with rigour. Expense management remains a priority. However, we continue to invest in the future, with strong focus on operations with high growth potential. 

“Our turnaround programme is not yet at the halfway stage, but the groundwork has been laid for significant improvement. We can now build from this base,” Moore concluded.