Despite a jump in net sales and profit, Spicers recorded a statutory loss of $6.7 million for the half-year ended 31 December 2018, after booking a $15 million loss on the sale of its Asian operations. The paper company and wide format supplier is preparing for its proposed sale later this year - pending shareholder approval - to Japan-based global paper giant Kokusai Pulp & Paper (KPP).
The half-year loss comes after a healthy increase in net sales and profit from continuing operations, with net sales revenue of $158.6m, up 4.9% on the prior corresponding period (pcp), while profit after tax on continuing operations was $5.9m, “strongly up” by $4.0m or 214% on pcp, Spicers told the ASX.
Australian earnings before tax were up 66% to $5.1m, while New Zealand’s underlying EBIT of $3.9m was 0.5% higher than pcp. The company’s ‘net cash’ position at 31 December 2018 was $38.7m.
The Print & Packaging division grew by 8.5%, but Sign & Display revenue was 5.3% lower in “soft” market conditions.
“Challenging market conditions in the Sign & Display media category during the 6-month period led to a decline in sales revenue, which was partly compensated by increased revenue in the architectural category, following Spicers securing distribution rights to 3MTM Window Film products," the company said.
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| Spicers CEO David Martin |
“A statutory loss after tax of $6.7m was incurred in 1H19, including a loss on sale of the Asian Operations of $15.2m." The Asian businesses consisted of operating subsidiaries Spicers Paper Malaysia and Spicers Paper Singapore.
CEO David Martin said the results showed that Spicers was continuing to “meet our promises.
"With ongoing growth in our revenue, along with our continuing focus on efficiencies, we have met our promise to improve shareholder returns consistently, period-on-period, over the past two and a half years."
“Initiatives to further improve our growth potential, and seasonal working capital trends, have led to a cash outflow in the first-half, which will essentially reverse in the second-half. We are very pleased with the continued progress in our operating businesses and, working in concert with the board, our Corporate cost reduction initiatives, all delivering improved shareholder value.
“This has all now culminated in an offer from Kokusai Pulp & Paper to acquire the whole of Spicers via a scheme of arrangement, a proposed transaction that we believe is very attractive to shareholders," said Martin. "We look forward to updating shareholders and seeking their support on this proposed transaction in the coming months.”
Spicers, formerly PaperlinX, has signed a $A147.6 million Scheme of Implementation agreement to sell its entire Australia and New Zealand operations to Japan-based global paper company Kokusai Pulp & Paper Co (KPP).
Shareholders are expected to vote on the proposal in June.
