Astrapak disposal sparks talk

Johannesburg - News that JSE-listed packaging company Astrapak is selling off businesses in its flexible plastics division has rekindled talk that the company will delist.

Metier, the private equity firm run by former Astrapak chairperson Thierry Dalais, has built up a 34.9% stake in the struggling plastics packaging firm.

"There is a feeling in the market that it [Metier] might make an offer for the rest of the company; it seems crazy to own 34.9% and be doing all the behind-the-scenes work," said Coronation Fund Managers portfolio manager Alistair Lea.

On Tuesday, Astrapak said 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 amount 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.

Flexible plastics are used to package potato chips, salads, creams and sweets.

Lea said Astrapak's flexibles division has been "... a serial underperformer, generating very poor returns." Profit from operations in the flexibles division for the half-year to end-August 2008 fell 88% to R2.1m.

Most of Astrapak's products are made of plastic polymers which are derived from oil. Astrapak reeled from the sharp increase in oil prices experienced over 2008; the price of oil peaked at an all-time high of over $147.27/barrel in July 2008.

The price of oil has retreated since, trading below $50/barrel.

On Tuesday, the company said it had a strong recovery in the second half of the 2008 financial year due to a reduction in polymer prices and better efficiencies in the business.

In a statement, Astrapak CEO Marco Baglione said: "Trading conditions in the last six months have remained very challenging. Notwithstanding this, we have managed to reverse the downward trend seen in the group over the last few financial reporting periods."

The company reported an 84% fall in headline earnings per share (Heps) to 9c for the half-year period. For the full year to end-February, Heps are expected to be between 5% to 15% lower to between 58.7c and 65.6c.

Lea said: "We expect fortunes for Astrapak to improve dramatically, despite the poor economic conditions, because its main markets are food and beverage and the demand for its products does not fall away considerably."

- Fin24.com