Finweek English Edition - - Companies & markets - MARC HASENFUSS

PACK­AG­ING GROUP BOWLER MET­CALF (BOW­CALF) has con­sis­tently out­per­formed most – if not all – of its larger peers in the last decade and a half. The group has earned a rep­u­ta­tion for re­li­able and high-qual­ity pack­ag­ing ser­vices, and man­age­ment is no­to­ri­ous for its no-non­sense at­ti­tude when it comes to run­ning op­er­a­tions cost ef­fec­tively. But Bow­calf’s in­terim re­sults to end-De­cem­ber showed the first dip in prof­its since the group listed on the JSE in 1987 – an event that (know­ing the fickle sen­ti­ment for smaller com­pa­nies) may prompt ques­tions about Bow­calf’s prospects. OP­POR­TU­NI­TIES De­spite size­able (as high as 40%) in­creases in raw ma­te­rial costs hit­ting its core plas­tics di­vi­sion, Bow­calf man­aged to curb the mar­gin squeeze to just 1%. At 17%, the pre-tax profit mar­gin is more than re­spectable. While the in­abil­ity to pass on raw ma­te­rial price in­creases to cus­tomers took as much as R5m off bot­tom line, there seems ev­ery chance that Bow­calf could re­gain lost prof­its in sec­ond half trad­ing. Direc­tors say raw ma­te­rial prices have al­ready soft­ened. • The hike in the in­terim div­i­dend to 9,1c/share – de­spite a marked re­duc­tion in cash flow – sug­gest direc­tors are fully con­fi­dent of a stronger sec­ond half show­ing. RISKS Qual­ity Bev­er­ages, the group’s bot­tling sub­sidiary, more than dou­bled prof­its to R3,3m even though op­er­a­tions were ham­pered by the na­tion­wide short­age of CO2 dur­ing the peak sum­mer months. But can Qual­ity ex­tend this per­for­mance through the (seem­ingly swel­ter­ing) au­tumn and win­ter sea­sons?


Source: I-Net Bridge

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