COVID-19 helps Pro-Pac Packaging to $6.6m FY20 profit
After recording a hefty loss last financial year, industrial packaging stock Pro-Pac Packaging (ASX:PPG) has climbed to a $6.6m profit in FY20.
Pro-Pac’s turnaround was apparent in February in its half yearly results. But the positive momentum has continued throughout the COVID-19 pandemic.
Underlying earnings improved by 15 per cent to $32.4m and its revenues totalled $478.2m.
The company’s operations were able to continue during COVID-19 and it operated without JobKeeper assistance or rent relief.
Pro-Pac has reinstated dividends, declaring a 0.4c-per-share payout and had reduced its debt further.
“I am proud of how the Pro-Pac team has continued to focus on our growth objectives and delivered a set of strong financial results despite the ongoing challenges of the COVID-19 pandemic,” CEO Tim Walsh said.
“The significant improvement in our balance sheet and our focus on driving growth through operational excellence delivers a strong foundation for Pro-Pac to become an industry leader in the manufacturing and distribution of packaging products.”
Pro-Pac is likely a beneficiary of the e-commerce boom. COVID-19 has accelerated the shift to online purchases.
While Walsh was reluctant to credit the company’s financial win to this new trend, he admitted COVID-19 bought headwinds as well as tailwinds and e-commerce was a future opportunity.
“We certainly believe e-commerce is a market segment which our business can certainly can benefit from,” he told Stockhead.
“It fits within our core competencies, particularly our industrial business. And it’s certainly a market segment that we are developing further and this will be a significant opportunity for the company moving forward.”
Pro-Pac was one of the biggest winners this morning with shares rising as much as 16 per cent. Shares are up over 50 per cent in 2020.