Bowler Metcalf, a plastics packaging specialist, has topped up its interim dividend after a strong turnaround in its 43%-owned soft-drink bottling associate, SoftBev.
Results released on Wednesday showed SoftBev – bottlers of Jive, Pepsi and Reboost – swung R13m into the black for the six months to end December 2017 after incurring a R20m loss in the corresponding six months in 2016.
The market anticipated a better performance from Bowler’s beverages interests with the share price having gained more than 40% after dipping to 720c at the start of February.
The extent of the turnaround is, though, somewhat surprising after Bowler impaired its investment in SoftBev by R72m in 2017. The performance from the soft-drink associate – which is likely to be sold shortly and has been classified as a discontinued operation – helped offset challenging trading conditions in the core plastics packaging segment. Turnover in the packing division edged down 3% to R289m with operating profits coming in 1% higher at R45m – thanks mainly to a R14m reduction in operating costs.
The fizzier SoftBev profits helped push earnings 60.9c per share, prompting Bowler to hike the interim payout to 20.48c per share (last year: 19.32c).
Bowler CEO Friedel Sass said a number of issues had burdened the firm over the interim period — including changeable weather, PET (polyethylene terephthalate) material force-majeure shortages, material price escalations and a strained consumer environment.
“In this context, the return to profitability by SoftBev is extremely rewarding.”
He said the packaging business had to batten down the hatches in an uncharacteristically fickle period towards the end of 2017.
Sass said Bowler Plastics could not buffer the “down buying” behaviour of consumers at year end. He said certain niche products were affected by significant volume losses with the business experiencing a 3% revenue drop against the record performance of the prior year.
Sass said the PET material shortage had negatively contributed to both costs and sales in peak time when prices reached 74% premiums.
Turning to the beverage investment, Sass said fickle weather in KwaZulu-Natal and Gauteng affected sales, but that the Western Cape region had performed well.
Bowler recently accepted an expression of interest for its stake in SoftBev. Sass said this was in line with the long-stated objective of exit from the beverages business to pursue packaging business growth.
Sass believed the packaging business would probably continue trading in a subdued consumer environment.
But he noted encouraging signs of revitalised activity.
Bowler shares were untra-ded in Johannesburg on Wednesday, holding at a 12-month high of R10.30.