23 February, 2017
Courtesy of the Australian
Packaging billionaire Raphael Geminder says Australians are “regionally and globally naive’’ if they think local businesses can compete on the international stage without urgently addressing serious domestic cost imposts such as higher energy costs, tax rates and wage rates.
The chairman of listed packaging group Pact said the country needed a strategy to become globally competitive across a range of measures, especially as countries such as the US under the leadership of Donald Trump examined new stimulatory measures to improve their competitive position on the global stage.
“We need a clearly articulated strategy on where the country is going to go on a whole bunch of metrics. Power is today’s crisis, but then it will be tax, then wage rates, then inflation,’’ Mr Geminder told The Australian yesterday when asked how concerned he was about soaring energy costs across the economy.
“The country needs a strategy on how it can be competitive. To think we can compete in the region with the sort of cost imposts this country has is regionally and globally naive.”
Mr Geminder, a member of the billionaire Pratt paper, packaging and recycling family, said there was “a global war on for regional competitiveness’’ and Australia “needs to get its skates on”. His comments came as Pact Group vowed to become a billion-dollar-player in the contract packaging market after announcing the acquisition of the family-owned Pascoe Group for $41 million as it reported a 20 per cent lift in half-year net profit to $50.2m. The Pascoe acquisition expands Pact’s investment in specialised contract manufacturing following the acquisitions over the past 18 months of Jalco from Smorgon scion Barry Smorgon and Australian Pharmaceutical Manufacturers.
The Pascoe deal will mean 20 per cent of the group’s revenues are now generated from that market segment. “It is a $1 billion opportunity. We can be a $1bn player,’’ Mr Geminder said.
Pact CEO Malcolm Bundey said the group was only one third of the way towards its aspirational $1bn target in the contract packaging space, which includes packaging of home care (aerosol and non-aerosol), health and wellness, personal care, automotive and food products. The move into contract packaging also gives Pact diversity away from the dairy food and beverage sector, which represents up to 50 per cent of group revenues.
Pact’s half-year profit after tax before significant items was $52.9m, up 15 per cent compared to the prior corresponding period of $45.9m.
The company also flagged cost reduction benefits of $7m for the full year and $10m-$12m annually going forward. CLSA told clients that Pact’s operational improvements “are coming through quicker and greater than we expected”.
Pact declared an interim dividend of 11.5c a share, 15 per cent higher than a year ago. Pact shares closed 3c higher at $6.66.