Pact released a result in-line with expectations. Earnings contributions from past acquisition, along with benefits from efficiency measures, were partially impacted by earnings pressure in the underlying business.
Pact's Australian operations experienced weaker demand from the agricultural sector, and from industrial sectors (impacted by the slowdown in mining activity). The subsequent lower volumes were offset by prior bolt-on acquisitions as well as the Sulo acquisition (the green municipal bins). This culminated in a revenue increase of 12.8%, and earnings increase of 11.4%.
Pact's international division also experienced weaker demand from the agricultural and industrial sectors, and also from the dairy sector. Revenue decreased 2.6% and earnings decreased 3.6%.
Sound management of the company continues in the tough trading conditions, with a focus on efficiency measures (including optimising plants), disciplined cash flow management, and packaging innovation. Overall Pact's underlying profit increased 9.8%, and the dividend increased 5% to 10cps.
Pact is a well managed company, with opportunity grow to through acquisition. Additionally, it provides a strong income return through fully franked dividends.