Colorpak’s journey continues, as the business incurs costs to integrate the Carter Holt Harvey business. This is good news for the packaging industry, as CHH’s low pricing made the industry unsustainable in this region. The editorial emphasises improvement to the underlying business, while acknowledging that continuing to manufacture in Australia will become more challenging.
To their credit, Colorpak management have done a good job swallowing $15m worth of integration costs, with a marginal increase to gearing, now at 36.7%.
EBITDA margin shrank from 12.6 to 8.7%, however debtor and inventory days have both improved.
The business appears to now be on a more even keel, and I look forward to seeing HY13 results to confirm a stronger and bigger Colorpak. To return to their EBITDA margins of 18% on a revenue nearing $200m would be an ideal outcome, although probably unlikely in the immediate term.
I continue to hold and look forward to HY13 and FY13 results to confirm current strength of the business.