Overview of Pro-Pac Packaging's financial performance in H1 FY24

Pro-Pac Packaging Limited (ASX: $PPG) reported a 13.3% decrease in revenue from continuing operations to $158.9 million in the half-year ended 31 December 2023. The decrease was attributed to the impact of lower raw material costs passed on to customers, reduced consumer spending patterns, and adverse weather conditions affecting agricultural volumes in Australia and New Zealand.

Executive commentary on financial performance and outlook

The Group's profit before income taxes and significant items improved during the half-year, with a loss of $5.5 million compared to a loss of $6.2 million in the previous year. The company continues to focus on improving profitability amidst challenging market conditions. The working capital increased by $4.0 million, while net debt rose to $22.9 million due to capital investment. The Group returned to more normalized levels of cash flows compared to the prior year, with an operating cash inflow of $0.9 million. The Group's outlook remains challenging and volatile, with expectations to achieve around breakeven EBITDA (pre-AASB 16) for the FY24 year.

Summary of Pro-Pac Packaging's outlook and strategic priorities

Pro-Pac Packaging faces challenges in a high inflationary market impacting consumer buying behavior, soft market conditions, and disruptions caused by the Middle East war affecting logistics and customer sentiment. The company aims to restore customer service levels, reduce costs, and grow volumes with recent investments in new equipment. Additionally, the focus is on innovative product offerings to meet recycled content targets and leadership in the plastics industry around soft plastic recycling and the circular economy. The Group anticipates further announcements on partnerships and industry collaboration, with the objective to be operational by Q4FY25. Despite the challenging trading environment, the company remains focused on its strategic priorities and aims to navigate through the market challenges.