Bowcalf may change tack on soft-drink unit
CAPE TOWN — Plastics packaging specialist Bowler Metcalf (Bowcalf) increased the top line contribution from its softdrink filling business, but this was not enough to provide any fizz for the bottom line.
Bowcalf, which has one of the most consistent profit growth records on the JSE for the past 25 years, finished the year to endJune with headline earnings down 4% at 55c per share.
The Quality Beverages softdrink business — which bottles the Jive brand — managed to push up revenue 7% to R375m, chipping in R100m more to group top line than its core plastics packaging operations, which showed a 7% decrease in revenue to R275m.
The profit contribution from the soft-drink operations was only R3.5m, with Bowcalf CEO Friedel Sass reporting that the division did not contribute meaningfully to group profits because of its recent expansion into Gauteng. He said that while Quality Beverages saw a 13% growth in volumes in its traditional Western Cape market, the division’s brands failed to find market support in Gauteng.
Mr Sass hinted at decisive action with regard to Quality Beverages’ Gauteng strategy, with a business review, restructure and launch of a specific Gauteng brand. “This part of the business is closely monitored for its continued future in the group.”
Although subdued, Bowcalf’s plastics packaging business still dominated the profit line with a contribution of R42m.
Mr Sass said the cosmetic and toiletries industry (the core of the plastics business) continued with a subdued performance from low consumer spend and volume losses due to imported finished goods. But he noted that the plastics division’s trading margin of 11.1% underlined Bowcalf’s approach to niche market development rather than chasing lower margin commodity business. He was also more hopeful for the trading period ahead, with signs of a rebound in downstream industries evident during the last quarter of the past financial year.
Bowcalf’s decision to hike its final dividend to 15.8c per share (from 15.4c per share) underlined Mr Sass’s optimism for the financial year ahead.