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Johannesburg - JSE-listed packaging manufacturer Astrapak will not pay a dividend this year in order to fund "acquisition-type investments" and preserve funding for its "strategic internal growth options".
Speaking after the release of its financial results for the year to end-February on Wednesday, CE Marco Baglione said Astrapak's history had been one of organic growth, project growth and acquisitions. "We need as much cash as possible to put into acquisition-type investments," said Baglione.
Astrapak's dividend for 2008 was 14.5c/share.
Baglione's acquisition trail intentions come after a year in which Astrapak announced plans to sell certain operations. The company announced in March that it was selling Astraflex, Cape Wrappers, Diverse Labelling Consultants, Astra Repo, Tamperpak and Astrapak Flexibles to Pamish Investment, a wholly owned subsidiary of Afripack, for R183.6m. This transaction also includes the two properties occupied by Cape Wrappers and Astrapak's equity interest in its Mauritian joint venture with Harel Group, which produces shrink-film and laminated products in that country.
Revenue increased by 16% to R2.7bn, of which 12 percentage points was due to sale price increases, one percentage point to acquisitions and the rest toSS volume growth. Profit from continuing operations for the year to end-February 2009 rose 13% to R250.9m, while headline earnings per share increased by 4.5% to 72.1c.
The sudden drop in the oil price during 2008 worked in Astrapak's favour, as most of its products are made of plastic polymers which are derived from oil.
Astrapak's search for new acquisitions comes after it announced, also in March, it had reached an agreement with Nampak to acquire a plant, equipment and related stock used in its Flexpak business. In addition, the company acquired various minority interests for R31.6m.
Baglione said Astrapak will continue to make acquisitions if potential targets make business sense.
During the 2009 financial year, the group's net debt decreased by 21.4% to R441.9m. Baglione expects it to decrease further as interest rates continue to decline.
"It's a very pleasing result under the present circumstances, Baglione said. "We're doing a lot internally and this is what is going to pay out dividends in the long run."
Astrapak's shares closed 20c up for the day at 820c.
- Fin24.com
