Bowler Metcalf battens down the hatches


Bowler Metcalf battens down the hatches

Published Date: 2019-09-13 | Source: Stephen Gunnion | Author: Stephen Gunnion

Bowler Metcalf battens down the hatches

The plastics manufacturer says the sector is likely to remain volatile and it will buy back some of its undervalued shares.

Bowler Metcalf says the successful sale of its SoftBev business to The Beverages Company in April was followed by a particularly challenging time for its remaining plastics business. A crippling strike, load shedding, a R4.7 million tank write-off, unrecoverable material price surges and a deflated order book were some of the challenges it faced.

These events had a negative impact on the group's earnings for the year to June. So it was ironic that earnings from the discontinued SoftBev business were a welcome bright spot for the group.

CEO Friedel Sass says volatility in the local manufacturing sector is likely to continue for the next few years. Recognising that, the group has reframed the cost base of the business following the finalisation of the SoftBev sale in April. Its main objective is growth, mainly organic and with partners valuing the integrated supply chain. Sass says the group is well entrenched in the personal care, chemical and food packaging sectors and plans to invest in the recapitalisation of its equipment and moulds, to build specialised capacity in a changing market.

The group also plans to take advantage of an undervalued share price and will spend about R40 million buying back its own stock.

For the year to end June, revenue from continuing operations declined by 6% to R542 million while profit from operations fell 34% to R63.6 million. It recognised a R140 million after-tax profit on the disposal of SoftBev, taking attributable earnings for the group 151% higher to R211 million. Basic headline earnings per share for the year declined by 25% to 88.1c. .

Its shares closed unchanged in thin trade yesterday.

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