Colorpak pays price for CHH acquisition with $3.2m loss

Colorpak has hailed its underlying position after costs associated with the Carter Holt Harvey acquisition caused an annual loss of $3.2 million and a rise in debt to $39 million.

The trans-Tasman packaging company posted a 14% year-on-year increase in debt and a 120% decline in its after-tax position.

Managing director Alex Commins told ProPrint that the red ink was "entirely" due to the ongoing costs associated with integrating Carter Holt Harvey (CHH) into the business.

Colorpak's net profit rose 8.5% to $7.7 million once $15 million of restructuring costs were removed.

There was also a 53% surge in sales to $192 million, which the company attributed to the CHH acquisition.

"It's an exceptional result in a tough economic environment… We've reached the peak of our debt cycle," said Commins.

The 700-staff operation said future growth would come from expanding its product range, selling existing products to newly acquired customers and using the scale and expertise of the expanded company to win more tenders.

Colorpak said it would also "apply intense attention to increasing margins" through pricing, innovation and cost-cutting measures such as site rationalisations.

Colorpak has bought six businesses in the past 12 years – and Commins said the company would continue looking for potential acquisition targets.

"We're a business that's had a history of growing strongly both organically and acquisitively," he said.

One of the highlights Colorpak noted for 2011-12 was the greater diversification of its customer base, but that has almost reached its limit, according to Commins.

"The diversity in the customer base is about as broad as you could expect it to be in the Australian manufacturing environment."

Colorpak said it would be challenged in 2012-13 by a strong Australian dollar, a soft retail sector and a limited ability to pass on significant cost increases such as the carbon tax.

"We've had reasonable success in passing [the carbon tax] through, but not 100% success," said Commins.

Colorpak posted "the highest six-monthly profit in the company's history" in January and a net profit of $7 million in 2010-11.