Colorpak has recorded an after tax net profit of $1.6m for the first half of the 2015 financial year, up from previous year’s $1.2m, but the company says its performance has not reached its ‘expectations’.
The company posted a two per cent increase in its sales figures for the first half of FY15, making $84.15m up from last year’s $82.56m. Colorpak’s EBITBA is up from $5.33m to $6.49m for the first half of 2015 financial year, compared to the same period last year.
The packaging manufacturer and printer, Colorpak, has also reduced net debt by $2.95m since June 2014 to $36.4m in December 2014.
Colorpak says over the past couple of years, the folding cartonboard packaging industry has been undergoing a ‘substantial change’, which has posed some challenging conditions on the company.
A spokesperson for Colorpak says, “There has been a sustained buy-side pressure being applied by supermarkets under the banner ‘cost-down’ which is ultimately passed through to primary packaging manufacturers as demands for continuous cost reductions.
Alex Commins, managing director of Colorpak
“Furthermore, another supermarket strategy has resulted in the demise of many speciality brands and the rise of generics, all leading to a contraction in margins for manufacturers. And finally, where local manufacturers cannot meet cost targets, a greater proportion of products have been sourced offshore.”
The company says these factors have created market uncertainty, affected demand and have reduced margins.
“With the reduced margins, and the highly competitive environment prevailing, the company has responded by focusing on a wide range of cost reduction initiatives, including rationalising manufacturing sites to Breaside in Victoria, Regents Park in NSW and in Auckland, NZ, together with reducing workforce numbers and taking a number of other cost reduction actions.
However the company says it is optimistic with the falling local currency forecast, which will take ‘some pressure off the supply chain and the threat of off-shoring products’.
“Substantial progress has been made in relation to reduction of waste, spoilage and better process flow, however the targets we had set for ourselves are proving slower to achieve than had been envisaged,” the spokesperson says.
While the results are not as the company expected, the direction its going might come as good news for the managing director Alex Commins who is employed under a contract which terminates on August 31, 2015. The company may renew his contract for another term prior to this date.
