Ottery-based plastics packaging specialist Bowler Metcalf (Bowcalf) has pulled of an unbelievable comeback in the year to end August – and now has substantial long-term contracts in place to fund new technical innovations.
The company – which recently decided to relinquish less profitable contracts with a large and longstanding customer – was largely expected to scratch around for replacement business in a tough packaging market. But, as CEO Friedel Sass, noted the financial year was a watershed one for Bowcalf – which ‘merged out’ its soft-drink bottling interests (under the old Quality Beverages) into a new and larger corporate vehicle called SoftBev.
“We undertook a corporate action that resulted from the reassessment of our strategy of vertical integration into the beverage industry. This resulted in a shift from full-ownership of the integrated beverage facility to a minority holding in a much expanded beverage company.”
It seems this restructuring of operations and the tough trading conditions prevalent in the packaging sector helped Bowcalf’s initiative to restore profit growth. Sass argued that Bowcalf’s traditional rigid plastic packaging operation was actually the beneficiary of sustained financial pressures that the plastic packaging industry was forced to bear over the last two years. He added that measures undertaken by Bowcalf management to prosper within those constraints also helped.
“These pressures have caused the demise or realignment of certain competitors and we were able to benefit under these conditions.”
Sass said that in a “less than buoyant” market this prosperity materialised in an 18% revenue growth to R498m and a concomitant 30% growth in earnings R72m.
Saas said the performance by Bowler Plastics fairly reflected the dual benefits gained in a transition from the beverage side restructuring and (more importantly) new business growth.
“We have witnessed a significant growth in our customer base over the last eighteen months and have partnered with those customers who value technical innovation, quality of production and consistency of supply above price alone.”
Management’s efforts in running a lean and mean operation premised on a quality service offering is reflected in the improved operating margin of 16% – a marked improvement on the previous financial year’s 12%.
Sass said Bowler Plastics was fortunate to have been be awarded long term contracts at a value exceeding R360m. “This provides us with the impetus to maintain and accelerate our technical offering.”
He said Bowler Plastics was currently industrialising several new processes – which would be brought in to play in three manufacturing plants. Bowcalf has set aside capital expenditure of R55m for these technological and capacity upgrades.
Sass said the current state of the rigid plastic packaging landscape boded well for Bowcalf.
“The execution of this opportunity falls squarely on the company’s management team, who have already displayed resilience, determination and ability.”