Bowler Metcalf flips the switch on unreliable power from Eskom

Reducing reliance on Eskom’s erratic power supply has helped Bowler Metcalf swing back into profit for the half year to the end of December, positioning the rigid plastic specialist to satisfy envisaged market demand for packaging.

This week the R770m JSElisted industrial group reported a 47% jump in profit from operations for the six months to R56.6m. This is in stark contrast to the 25% decline it reported in the same period for 2022.

Basic and diluted headline earnings per share grew 52% from the previous reporting period, the company said.

The improved performance was driven by an uptick in volumes and the result of improved operational efficiencies as the company spent R45.1m of its R67.9m capital commitments in the reporting period on plant and machinery, moulds, motor vehicles, backup generators, and solar installations.

Further relief is expected from 2MVA of solar energy that is to be commissioned in the next months.

“Over the past 12 months, substantial effort has been put into building an operating environment that can deal robustly with energy supply uncertainties and its peripheral economic and social risks and disruptions,” CEO Friedel Sass said.

“On the back of slightly reduced load-shedding, these dynamic business contingency plans, which extend beyond just backup generators and solar energy supply, have enabled the business to restore operating capacity and supply chain reliability,” he said.

The improvements provided “much-needed confidence” and attracted additional sales volumes with significant new business projects having been contracted, resulting in a sales growth of 21% over the period, Sass said.

The board declared a record interim ordinary dividend of 24c, compared with 15c in 2022.

ENERGY-INTENSIVE

Listed on the JSE in 1987, the Cape Town-based company with property holdings manufactures and sells rigid plastic packaging for the toiletry, cosmetic, household, pharmaceutical, and food markets in SA. Its manufacturing processes include injection and blow moulding, extrusion together with comprehensive printing and decorating capabilities, making it an energy-intensive operation.

In the previous comparative period continuous and highlevel load-shedding had clawed deeply into its operational and customer performances, resulting in a 34% plunge in operating profit. In response to Eskom’s unreliability, the company undertook an intense focus on reducing its reliance on the unstable power source, committing more than R50m towards an energy solution.

The group said its investments are paying off, resulting in higher capacity utilisation, especially in its packaging segment, which had been hit hard by load-shedding.

Packaging revenue rose 21% to R430m. Though slightly higher raw material costs were incurred in the segment, these were offset by factory and warehouse cost reductions through improved economies of scale, the company said.

In a bid to future-proof the company, about R120m has been earmarked to fund the energy contingency programme, property upgrades and expansion, project investments, research and development of two new processes, and equipment replacements.

Bowler ’ s new business development includes a heightened marketing focus, new technology developed with partners and new product introductions.

“With this level of investment behind a dynamic and enthusiastic workforce and a trusting customer base, the business is well positioned to satisfy the envisaged market demand and remain a favoured supplier to the SA packaging market,” the CEO said.

At R10.32, Bowler Metcalf shares have slipped 1.27% in the last seven days but have risen 49.5% in the past five years.