Hart’s packaging outfit lifts revenue and earnings in Q1
GRAEME Hart’s US packaging giant, Pactiv Evergreen, enjoyed a lift in revenue and earnings in the first quarter.
Net revenue came to $US1.5 billion ($NZ2.3 billion) for the quarter, up 28% on the same period a year earlier, and ahead of Bloomberg consensus estimates of $1.34 billion.
Net income from continuing operations of $43 million for the first quarter of 2022 compared to a net loss of $11 million in the year before.
Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) from continuing operations were $182 million for the quarter compared to $77 million a year earlier.
The company is maintaining its Ebitda guidance of $705 million for 2022.
Pactiv Evergreen chief executive Michael King said the company finished 2021 strongly and had a solid start to 2022.
Pactiv Evergreen’s volumes were down 5% in the quarter, primarily because of labour challenges.
Looking ahead, labour challenges were expected to subside.
Mr King said Pactiv Evergreen was making good progress on improving its mill operations and managing inventory levels.
‘‘We remain cautious and prepared as high levels of inflationary pressure and volatility remain in the market,’’ he said.
NASDAQlisted Pactiv Evergreen is part of Hart’s private investment company, Rank Group.
Pactiv and Evergreen Packaging were brought together in 2020 by Rank’s Reynolds Group and the combined entity was launched as an IPO at $14 a share late that year.
The stock last traded at $11.
Xero’s comeback?
One analyst is backing a bounceback in the Xero share price after its recent selloff.
Jarden’s Elise Kennedy has a 12month target price of $A150 ($NZ165.74) on the Kiwi accounting software company, which is listed on the ASX but still has its head office in Wellington.
Like other tech stocks, Xero shares have fallen in recent months as investors move away from growth companies as interest rates rise.
After hitting a high of $156.65 in November, it touched $88.14 this week.
But Ms Kennedy has a buy rating on the company, whose results are due on Thursday.
In a note this week, she said the recovery of small and mediumsized entities may not be as strong in Australia/New Zealand and the UK markets as expected by the market, but this would be partially offset by the churn in Xero’s clients remaining low compared to expectations.
‘‘It is not clear to us that Xero has pulled back on spend versus other global tech stocks similarly impacted by rising costs. In short, there may be risk on the down side; however, it is uncertain how much is in the price already (given the stock is down 41% from its November 2021 high).
‘‘We continue to see Xero as a longterm buy, given it is a global market leader in a $74 billion enterprise resource planning finance TAM [technology acceptance model] and with IT adoption at greater than 20%, it provides a long runway for growth. We see regulation, platform revenue growth and acquisitions as potential catalysts for the share price.’’
Mainfreight down
Brokers Forsyth Barr have dropped their target price for Mainfreight from $94 a share to $84 after a rerating of the freight sector.
Analysts Andy Bowley and Matt Noland said in a note this week that Mainfreight’s key competitors had collectively seen a 40% pricetoearnings derating over the past year.
Mainfreight shares got as high as $98.52 in September last year, prompting some to predict they would become New Zealand’s first $100 stock.
But they have since fallen back and were trading at $80.29 a share at close on Friday.
The analysts said that while Mainfreight shares had also followed global peers downwards, they remained at a 20% premium, driven partly by the company’s positive earnings growth and expectations of an earnings upgrade at its annual result announcement on May 26.
‘‘While current investor focus is on Mainfreight’s air and ocean operations, both transport and warehousing are enjoying abovetrend growth and will help to mitigate mediumterm profit growth headwinds as the freight rate supercycle unwinds.
‘‘We expect freight rate pressure to play out over the next few years, albeit at a slower pace than previously envisioned and to a higher level of ‘new normal’ rates than those of pre Covid19 times, thereby helping to cushion the impact on Mainfreight’s profit outlook.’’
The analysts lifted their profit before tax forecast for the 2022 full year by 1% and by 6% in FY23, and have a neutral rating on the stock.
NZX trade slows
The NZX said its trading had been slower over the month of April but the S&P/NZX 50 index was still holding up well compared to global markets.
‘‘We remain in a complex market with a focus on high inflation levels, rising interest rates and significant geopolitical concerns,’’ the NZX said.
Total value traded across the exchange was $3.17 billion, a decrease of 37% on the previous month.
Wholesale market total trades decreased by 27% from March to April, and retail trades dropped by 9%. The falls followed a strong March, particularly for wholesale. While trading volumes were down, April was still the secondstrongest month for the year, NZX said.
April saw strong capital raising activity, with equity capital raises from Air New Zealand, New Zealand King Salmon, Chatham Rock, and New Zealand Oil & Gas, as well as debt capital raising announcements from
Vector, Precinct Properties, Mercury and Kainga Ora.
Cannabis goes cold
This past Saturday was New Zealand’s 30th annual Jday, with promarijuana activists taking to the field to protest for legal cannabis.
Kiwi investors, though, are not so sure that the future is green.
While cannabis stocks enjoyed a huge surge in interest in the first half of last year, digital broker Stake has seen a dramatic dropoff in interest in the area in late 2021 and early 2022.Stake’s CEO, Matt Leibowitz, said marijuana stocks seem to be a trend that has come and gone for Kiwi investors.
‘‘Trade volumes have taken a dive from a peak in early 2021, and investors aren’t holding the stocks for long — they’re selling it at about the same rate as they’re buying.’’
Craigs profit up
Craigs Investment Partners has reported a 57.3% increase in its annual net profit to $42.8 million in 2021, said a filing lodged with the Companies Office.
Operating revenue increased by 11% to $251.2 million and the company paid $27.9 million in dividends.