Western Cape Business News

Send  Share  RSS  Twitter  09 Sep 2010

PACKAGING: Bowler On A Roll


Recent Western Cape Business News

Bowler Metcalf achieved an 13% rise in revenue to R518m, also bucking fast moving consumer goods trends and vindicating its diversification strategy.

Second half sales, particularly surrounding the World Cup showed a marked slowdown, underscoring its belief that the R2b+ drawn to football related activities adversely effected the FMCG market.

The plastics division was able to produce an 18% increase in after tax earnings on a 5% decrease in revenue, mirroring the strategy of shedding certain of the work that was making no contribution to the bottom-line. Margins were retained in a more stable raw material pricing regime, helped by the stronger rand and by more accommodating polymer suppliers, who were recently censored and fined by the Competitions Commission for price fixing. The strength of the rand also has severe negative effects for industry, the greatest of all being the fact that export sales of our larger clients have declined sharply and remain under threat.

The R14m expansion in 2008/2009 on a new laminated tube line is showing positive results even in the depressed market, and this augurs well for the future. The company has a budgeted capital expenditure of R44m for the current financial year and we wish to progress this rapidly in order to take advantage of favourable exchange rates and good pricing from beleaguered international machinery manufacturers.

It has been stated before that the plastic packaging industry has polarized in South Africa and Bowler believes this trend will continue. The company is exceedingly well positioned, having spent the last two years reprogramming itself to handle the extra demands on systems, personnel and machinery that a larger packaging producer has to bear, to serve and grow in its existing market.

The strong initiatives promised last year for Quality Beverages, after eighteen months of disappointing performance, have borne fruit and the company has shown a 22% growth in revenue to R262m. The R7.1m profit attributable to the Group is an improvement of 790% (off a low base). The brands are well established and accepted and are now sold on merit, not on price alone.

Initiatives put in place in the Gauteng/Mpumalanga operation continue to result in a turnaround as reported at half year. A Johannesburg bottling facility will be in sharp focus considering our current share of this market is only 0.9% and we believe that much upside potential exists.

The Group says it is well positioned to consolidate and grow its footprint in its chosen markets and believes that Bowler Metcalf has weathered the financial pressures, which started at the end of 2008, particularly well. It believes it will continue to outperform its industry.  

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