Poor trading, fire take toll on Astrapak

LISTED packaging group Astrapak says headline earnings per share are expected to plunge by between 52% and 72% from last year due to poor trading conditions and a fire at its East Rand plastics operation early this year.

The group said yesterday this means earnings will likely be between 7c and 12c, down from 24.9c the previous financial year.

Continuing operations are expected to plummet 64%-84%.

The company said that in addition to difficult trading conditions, the fire at its East Rand Plastics factory in Brakpan, and associated write-offs, hit revenue and profit.

“Whilst all possible mitigating actions — which include outsourcing, inter-group production and the recommissioning of certain mothballed equipment — have been implemented by the business, unfortunately force majeure had to be declared in terms of certain customers and markets,” it said.

“Due to the consequent reduction in turnover, the cost base of the business has also been reduced.”

Astrapak said the insurance assessment process after the fire had been completed and interim payments would now be made to the company regularly. .

It said all assets damaged by the fire had been fully impaired, and all destroyed or damaged stock, increased costs and loss of profits relating to the blaze were fully accounted for.

“It is Astrapak’s intent to utilise the insurance proceeds … to acquire a new plant to replace the lost revenue and margin stream, as and when the company identifies suitable market opportunities to achieve this objective,” it said.

This would be in addition to investment budgeted for in the ordinary course of business.

In line with its strategic interests, Astrapak said rationalisation of customers, markets and production facilities had caused further impairments of existing assets, and had increased costs.

Astrapak said that in the interim it had completed the reorganisation of its operations into divisional units. This would allow the group to benefit from its national footprint, with synergies across customers, technologies, procurement and supply chains.