Pact Group Announces Contract Manufacturing Services Sale Process Ceased
- Contract Manufacturing Services revenue declined $72 million or 18 percent to $322 million in FY21
- FY21 product volumes were also lower following robust demand for hand sanitiser and hygiene products boosted by the COVID-19 pandemic in FY20
- Packaging & Sustainability and Materials Handling & Pooling business segments experiencing ‘resilient demand’
- The AGM has been re-scheduled from 17 to 29 November
Pact Group Holdings Ltd (‘Pact Group‘ or the ‘Group‘) provides packaging solutions to the consumer and industrial sectors. This encompasses the manufacture and supply of rigid plastics and metal packaging for food, beverages and household consumables as well as the supply of pallets and crates for the transport and storage of products. Pact Group also provides contract manufacturing services covering homecare and personal care, household and industrial chemicals, automotive promotional packaging and pharmaceutical products.
Contract Manufacturing sale process ceased
Market uncertainty and supply chain disruption arising from COVID-19 have been blamed by Pact Group for cessation of the sale process of its Contract Manufacturing businesses. No other details were provided by the Group, which will now retain the businesses.
Contract Manufacturing Services contributed $322 million or 18 percent of Pact Group’s FY21 revenue. This amount was 18.3 percent lower than the FY20 revenue contribution of $394 million. Additionally, the underlying EBIT margin was 0.5 percent lower at 7.4 percent in FY21. Product volumes were also lower in FY21 following the extraordinary demand for hand sanitiser and hygiene products boosted by the COVID-19 pandemic in FY20. Automotive promotional packing volumes were impacted by a factory fire in FY21.
Significantly, Pact Group reported during the 2020 financial year that the purchased Goodwill component of a customer contract acquired as part pf a previous acquisition, was written-off, at a cost of $11.8 million. This may partly explain the $72 million decline in Contract Manufacturing Services revenue in FY21, compared to FY20.
Pact Group will now retain the business and address current challenges including supply chain disruption arising from COVID-19, as well as higher raw material and freight costs.
Q1 Trading Update and AGM reschedule
Pact Group, in updating trading conditions stated that the Packaging & Sustainability and the Materials Handling & Pooling business segments were experiencing ‘resilient demand’ and that raw material and international freight costs were ‘well managed’. No further reference was made to Contract Manufacturing Services in this section of the market release.
The AGM has been re-scheduled from 17 to 29 November. No reason was provided for the delay.