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Hats off to Bowler (again)

OTTERY-based plastics packaging group Bowler Metcalf once again showed the importance of maintaining a lean and mean corporate culture by bucking the dour industrial mood with strong profit growth in the six months to end December.

Bowler, for over three decades, has built a formidable reputation for maintaining a no-frills operating regime, and for not – like so many other listed companies – yielding to the temptation of the usual corporate trappings like fancy head offices. Bowler’s Spartan factory premises is a testimony to a business operating on a proverbial shoe-string. Shareholders that attend the annual general meeting can take solace that their capital is being very well looked after…

In the latest interim report, CEO Friedel Sass reported that in contrast to the general market sentiment, the core Bowler Packaging business performed very well in this past reporting half year. In a moribund economic climate, Bowler managed to push up revenue 12% on the corresponding interim period in 2019.

Sass noted: “The merits of a diverse essential goods portfolio, customer centricity and focused hands-on operations management came to fore.”

The numbers also speak for themselves: The 12% revenue increase was transformed into a splendid 34% hike in profit from operations to nearly R60m.

Sass cited economies of scale, effective cost control initiatives and disciplined teams in a challenging COVID-19 environment as major factors in the profit surge.

Sass said that while the Plastic Packaging segment showed solid growth against the comparative period, this must be seen in context of a ‘lower base’ over the past few reporting periods. This was caused by mainly volatile raw material prices and the impact of industry strikes.

What is most encouraging is that Bowler seems to have some immunity to the side effects of Covid-19. As a percentage of total trade debtors, the expected credit losses increased from 4.8% as the end of June 2020 to just 6.7% at the end of December. There were no material impact in bad debts written off in the interim period, or any material impact on cash flows from debtors.

Perhaps – and arguably most importantly – Bowler reported that no staff were retrenched during the six months ended December 2020 as a result of COVID19.

In terms of future growth initiatives, Sass reported that the warehouse expansion was on schedule to be completed by September 2021. “Apart from the warehouse expansion, R15 million in capital expenditure for business growth in a good projects environment is committed.”

There remains an air of caution at Bowler, which might be prudent in the uncertainty of the lingering Covid-19 pandemic. This meant that despite the sterling profit performance the interim dividend payout was only hiked 14% – which is no mean achievement considering how many companies had deferred or discontinued dividends in 2020.

Looking ahead, Sass stressed there were good opportunities for long term business growth and that energy cost optimizations were at advanced levels of finalization in the second half. “However, during this period, a general slow-down in demand from the existing business and higher raw material prices are two of the main challenges that will need to be dealt with.”

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