Gross profit at IPL Plastics up 6.6% during first quarter

Gross profit at packaging manufacturer IPL Plastics increased by 6.6 per cent to $26.2 million during the first quarter of the year, compared with $24.6 million during the same period last year, the company’s quarterly results show.

IPL, formerly known as One51, is a sustainable packaging solutions provider primarily in the food, consumer, agricultural, logistics and environmental end markets operating in Canada, the United States, Britain, Ireland, Belgium, China and Mexico.

The company employs about 2,100 people and has corporate offices in Montreal and Dublin.

IPL saw revenue drop by 4.4 per cent to $141.8 million during the quarter, compared with $148.3 million the year before. This was attributed to negative currency translation movements which were offset by price increases.

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Adjusted earnings before interest, taxes, depreciation, and amortisation (ebitda) amounted to $17.3 million, compared with $17.1 million the year before.

Net income was $1.1 million, compared with $1.4 million the year before. The difference was primarily attributed to a reduced income tax credit, which was $400,000 lower during the quarter compared with the year before.

Adjusted net income was $4.4 million, which was a reduction of $700,000. Earnings per share were $0.08, compared with $0.14 the year before.

The net cash outflow used in operating activities for the quarter was $5.1 million, which was a decrease of $14.8 million or 74.1 per cent on the figure of $19.9 million the year before.

‘Solid start’

IPL chief executive Alan Walsh said the results reflected "a solid start" to the year and "positive progress" on the group's adjusted ebitda margin, which increased from 11.5 per cent to 12.2 per cent.

“Temporary trading issues in our returnable packaging solutions division were more than offset by strong margin expansion across the rest of the group,” he said.

“We are pleased to have successfully completed the acquisition of Loomans, which is performing to expectations.

“Our fiscal 2019 expectation remains for an overall solid improvement in the group’s trading performance reflecting the benefits of the various initiatives we are taking and the underlying robustness of our business.”

In terms of outlook, IPL said management is focused on delivering an overall improvement in operating and financial performance during the year when compared with last year.

“This goal, which does not include the impact of the Loomans acquisition, is supported by the significant capital expenditure program that is nearing completion,” it said.

The company also pointed to advances in resin procurement strategies and the stabilisation of freight costs as positive signs.

An analyst with Davy said the performance was consistent with the outlook as previously outlined by management.

“The first-quarter result was impacted, as expected, by near-term challenges faced by the returnable packaging solutions division, but margin gains in the group’s other two divisions were encouraging,” he said.

“We expect a more substantive acceleration in underlying ebitda growth over the remainder of the year. Of particular importance in this regard will be the recently-completed Loomans acquisition and the gradual benefit from self-help measures.

“Evidence of this improvement coming through should be the catalyst for an improvement in the group’s share price and rating.”