Pact Packs In Acquisitions But Can More Be Done?

The performance of packaging producer Pact Group (PGH) was lifted in the first half by the contributions from acquisitions, partly offset by subdued underlying conditions. In FY16 the company will benefit from almost a full year of contributions from the Sulo business as well as the post September 2015 contribution from Jalco. Jalco is expected to lower the overall group margin, notwithstanding the delivery of synergies.

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Pact Packs Potential

Packaging company Pact Group (PGH) delivered on guidance issued at its IPO last December but there were two more important factors which pleased brokers – debt reduction and cash conversion. This underpins management’s credibility, despite any weakness emanating from the challenging macroeconomic environment. Moreover, the suggestion that acquisition of Dynapack, which is under consideration, may not meet financial criteria was also welcomed, signalling management is prepared to be disciplined regarding acquisitions.

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