Pact Group prepares for reinvestment and focus on recycling

Packaging and recycling group Pact Group has reported a slight fall in profit on rising revenues as it continues to invest in new packaging recycling operations and ready for further investment in its Australian packaging operations.

The company reported revenue growth for FY23 of six percent to $1.95 billion in tightening economic conditions, softer demand in Asia and weather events in Austraia and New Zealand.

Underlying EBIT was seven percent below FY22 at $145 million and was hit by increases in labour and supply chain costs.

Pact Managing Director and Group Chief Executive Officer Sanjay Dayal said: “The impact of increasing inflation is reflected in softening demand for consumer products which has impacted particularly on volumes in our packaging and sustainability segment where we produce high-quality packaging containing recycled content.

“We have experienced a change in customer buying patterns with a move towards bulk and private label buying.”

Reported net profit after tax was a loss of $7 million as a result of a non cash impairment of $37 million for property plant and equipment. The impairment is related to the expected replacement of equipment across multiple platforms in Australia.

Pact reported ‘significant progress’ in its strategy of leading in the circular economy:

• Pact sold a 50 percent stake in its Crate Pooling and Crate Manufacturing business to Morrison & Co, achieving net proceeds of $160 million while retaining 50 percent
• Continued development of a national network of recycling infrastructure including PET recycling facilities in Albury, NSW and Altona, Victoria and HDPE in Laverton, Victoria
• Continued investment in plastic packaging manufacturing sites to ensure production of high-quality recycled packaging, including opening a new site at Laverton
• And announced a strategic partnership with Woolworths and Aldi Australia to supply recycled plastic packaging.

Dayal said the company’s gearing remained elevated reflecting its capital programme with $125 million invested in the year, net of federal government funding through the Modern Manufacturing Initiative.

Further reading:
Pact Group in $500 million recycling pledge
Pact Group’s sustainability award
Browse @AuManufacturing’s coverage of Pact Group here.

Picture: Circular Plastics Australia