Johannesburg - Packaging company Astrapak [JSE:APK] said that consumer confidence in South Africa is still frail despite interest rate cuts.
"We are cautious about the future," said Marco Baglione, CEO of Astrapak. The company reported results for the year to end-February 2010 on Monday.
"There are improvements but some economic indicators are not that great," he added.
Packaging companies like Astrapak are frequently used to diagnose consumer health because they are closely related to a wide range of consumer goods.
Despite the tougher market conditions, Astrapak's profit from continuing operations more than doubled to R149m while headline earnings per share jumped 88% to 114.1c.
However, once-off expenditure and a reversed deferred tax asset have skewed the previous year’s bottom line. Once the headline earnings per share have been normalised, the annual increase amounts to 50%.
Revenue from continuing operations fell 5% to R2.6bn compared to the previous period, as a result of lower selling prices brought on by reductions in polymer input prices.
During the past year and a half Astrapak has restructured its operations on a major scale.
This involved the sale of two business concerns for R183.7m. The sale of two more units still needs to be finalised.
Astrapak's leaner operations are comprised of two divisions - rigids and flexibles, which service various consumer industries.
"The restructuring is complete and we are delighted with the results," said Baglione.
The company reported that the rigid division had performed well. The flexible division is currently under pressure due to overcapacity in the industry. Management has put various corrective strategies in place.
"We expect to see an improvement in both areas in the near future," said the company.
The group declared a dividend of 26.4c/share.
- Fin24.com