Transpaco profits up, calls for pollution drive

JOHANNESBURG – JSE-listed plastic and packaging group, Transpaco, is advocating for strong consumer education on the usage and disposal of plastic carrier bags, as it believes the environmental threat posed has more to do with human behaviour than the constitution of the materials.

In the year to June, the company said yesterday, operating profits rose 14.4 percent to R139.2 million from the prior year. It said it was working with its retail customers, the government and environmental groups to mitigate the litter problem from plastic carrier bags. The group declared a final dividend of 90cents per share, resulting in a total dividend of 135c per share compared to 120c in the prior year.

Transpaco said this performance was achieved, despite the subdued performance in the plastic division, including selling price deflation, reduced customer spend and stagnant demand for recycled material.

Chief executive Philip Abelheim said: “There is no product I am aware of more favourable to the environment than plastic bags. It is the most versatile way of conveying products, particularly for people without motor vehicle transportation. People who use buses, taxis, trains and walking find plastic carriers useful because it’s difficult to shop some distance from home and not have something affordable to carry your products in.”

He said some retail customers had decided not to stock up as many plastic carrier bags as they normally did and others had indicated they would either be reducing or stopping their orders.

“The anti-plastic debate continues and in particular the adverse sentiment towards retail plastic bags. While Transpaco is active in this market, our diversification strategy has reduced the group’s dependency on retail plastic bags,” Abelheim said.

Favourable

Despite this Transpaco indicated that all Transpaco divisions traded favourably.

Abelheim said despite the low demand for plastic carrier bags, Transpaco was not concerned about the contribution to the group’s overall performance, but that it was looking at alternatives to the material and would invest in viable alternatives.

Transpaco said the increase in operating profits resulted from stringent cost control, aggressive sales and marketing and sound working capital management. This translated into headline earnings increasing 12.4percent to R97million compared to R86.3m in the prior year, and headline earnings per share rising 13.3percent to 297.4c per share.

Turnover increased by 5.3percent to R1.7billion compared to R1.6bn in the last year.

The operating margin increased to 8.1percent from 7.4percent and the group’s net interest-bearing debt-to-equity position had been restricted to 11.6percent. Transpaco’s net asset value per share increased by 10.4percent to 1886c compared to 1708c last year.

The group in March this year acquired the Future Packaging group of companies, which operated across South Africa in the packaging and related products market.

Transpaco’s share closed 8.24percent higher on the JSE yesterday at R23.

– BUSINESS REPORT ONLINE