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Bowler Metcalf results tempered by plastics strike

12 Sep 2019, 22:14 GMT+10

Plastics packaging company Bowler Metcalf [JSE:BCF] released its annual results for the year ended to end-June, showed that the company felt the weight of operating costs and industrial action in the plastics industry which took place last year.

Around 10,000 workers in the plastic sector, represented largely by the National Union of Metalworkers of South Africa went on strike since October, demanding a 15% salary hike and a R40 hourly rate, after mediation failed. The cost of load-shedding, increases in material prices and a weaker order book also hurt its bottom line.

Headline earnings fell by 25% from R95.5m to R71.9m. Revenue decreased by 6% to R542m.

The results showed cash and cash equivalents of R382.9m in the year ended at June 2019, up from R202.9m for the year ended at June 2018. Total assets were down from R884.3m in 2018 to R754.3m in 2019.

Bowler Metcalf CEO Paul Sass wrote in his commentary that that the volatility of in South African manufacturing was likely to remain a real challenge for the company and others in the sector for some time.

Bowler Metcalf impaired its valuation of bottling business SoftBev, due to the impact of the sugar tax on the soft drinks industry in South Africa.

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"The undervalued share price has offered a good investment opportunity by continuing the buyback of the company shares. This spend is likely to be around R40m," Sass said.

Sass said he was proud of his team's management and their commitment to uninterrupted supply of products during a season of violent strikes.

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