Asked for the rationale behind this decision, Marco replies: ‘One prime criterion was the strong synergies within the rigid plastics and films businesses – particularly leveraging our position as a major purchaser of raw materials. Another was the better geographical footprint of these business which enables Astrapak to serve customers in all regions.
‘This decision wasn’t taken lightly,’ Marco continues, ‘but we felt it was the right way to go; and we took a great deal of care to find the right home for these flexible packaging businesses and their employees. There were several possible contenders, but we felt Afripack best met all the requirements of a good parent company for these operations. Of great value was being able to sell all the operations to on purchaser, rather than selling them off piecemeal. We decided to retain our Saflite and Knilam operations, as we see excellent opportunities for these two operations, within our films business.’
A more focused and hands-on approach by management is reaping rewards and Astrapak is starting to see the tangible benefits of its cost extraction and internal efficiency measures. An area where Manley Diedloff plays a pivotal role is that of financial discipline. Under his astute financial management, much attention has been paid to the implementation of systems, measures of control and working capital management, which has led to a material reduction in the group’s debt levels.
‘We have focused on preserving cash in these tough times and have been aggressive in our approach in extracting value from the businesses,’ he confirms. ‘Our latest results show that cash inflow from operating activities improved by 207% while our gearing levels reduced from 72% to 53%.’
Apart from Manley’s strong financial management, another key factor is international benchmarking, something on which Astrapak’s newly-appointed COO, Keith Watkins, has always placed strong emphasis. Previously as MD of Thermopac, and more recently as DCE of Astrapak’s rigid plastics businesses, Keith has always maintained that the quality of local packaging should match that of packaging manufactured in Europe. Equally important, however, has been his insistence on producing cost-effective products, helping customers to fend off the threat of imported products and allowing them to export cost-competitive products.
Keith’s passion to compete as a world-class packaging player led to culture of continuous improvement – first at Thermopac, and then rolled out throughout the Astrapak’s rigids plastics operations. Just one example was Thermopac’s becoming the first South African packaging converter to achieve BRC (British Retail Consortium) accreditation – recognised as the world’s most rigorous system of quality and hygiene management for food packaging. A world-class manufacturing programme provided a foundation for BRC, but the standards required to achieve BRC took Thermopac to new levels of excellence and this is now permeating throughout Astrapak’s rigid plastics businesses.
‘We’re in a process of reinventing ourselves and building and improving on what was already a world-class packaging player’
Ready for the economic upswing
Returning to the topic of trading results, Marco admits that market fundamentals are still not great. ‘Some volatility remains, and we can’t yet say that the market has turned, but we’re pleased with our achievements over a relatively short period of time and look forward to better times and considerably improved earnings. We’ve also enjoyed tremendous support from all our major shareholders and relevant stakeholders.’
With strategic and operational improvement plans well underway and a stronger-looking balance sheet, Astrapak is positioning itself to take full advantage of any upswing in the economy. ‘We’re in a process of reinventing ourselves and building and improving on what was already a world-class packaging player,’ Marco comments. ‘We’re concentrating now on business units, rather than divisions, with three long-term aims – total focus, attention to detail, and strong succession plans.’
After the sale of the flexible packaging operations, Astrapak retains 13 rigid plastics plants, ten film-related operations, and three individual companies (ITT, Plusnet Geotex and Alex White), employing around 3 700 people and with an the annual turnover of around R2,8-billion. It’s still a big business.
Astrapak has been marked by a certain entrepreneurial culture in the past. Is this to be retained? ‘Yes,’ Marco replies, ‘our culture is unchanged – flexibility but with the necessary checks and balances. We’re bringing science to the business of maximising our returns. The money is made at the factories and not at head office,’ he stresses.
‘There’s still a lot of work to be done and room for improvement, but we’re confident that we’re doing the right things from an internal perspective and our latest results confirm this. We can’t control external forces, but we can ensure that we’re in a position to adapt to anything the market might throw at us,’ Marco adds.
He concedes, too, that if high-quality acquisitions happen to pop into Astrapak’s sights, the group will have the reserves to make further purchases, particularly if they complement existing rigid plastics and films businesses.
To sum up, his demeanour can be described as optimistic yet cautious.
‘We’re excited about where are, considering where we have come from, and we intend to play an even greater role in South Africa’s plastics packaging market,’ are his final words.