PRINT and packaging company Clondalkin Group has announced it is looking for further organic growth and acquisitions after reporting a 22 per cent rise in profits to £18.3 million.
Chief executive, Mr Derek Scally said the group was actively looking at packaging companies in Germany, France and the US. While there has been no agreement, an acquisition could cost between £40 million and £60 million, said Mr Scally.
He had no comment to make on reports that his company had made an unsuccessful overture to Inishtech. While Inishtech has postponed a board meeting to consider an offer from Crean for the 29 per cent stake Crean does not own, Mr Scally said: "We are not in a position to comment until the offer is complete."
Clondalkin's results, announced yesterday, show a rise in pre-tax profit from £15 million to £18.3 million in the year to December 31st 1995, broadly in line with forecasts. The market responded enthusiastically with a 15p rise in the share price to 375p, the highest level since 1991.
About half of the growth was achieved organically. The rest is due to the incorporation of profits from acquired companies.
Shareholders will benefit from the growth. The final dividend is being raised by 20 per cent to 3.822p, making a total of 6p, representing a 15 per cent increase on the previous year. This dividend is covered five times by earnings.
All its geographical areas contributed to the profit growth. Operations in Ireland and the US had the strongest profit growths with a 20 per cent increase local currency terms.
This was attributed to organic growth reflecting benefits from investment, market development and initiatives in business restructuring, said the chairman, Mr Domhnall McCullough. Growth in the Irish operations arose mainly in the printing side.
In the US, the commercial printing operations, which had to contend with difficult trading conditions in 1994, enjoyed a good recovery.
Group operating profit rose by 23per cent from £16.2 million to £19.9 million. Around 59 per cent came from Europe where the US accounted for the remaining 41 per cent. product breakdown shows the printing and packaging operations accounted for 47 per cent while the packaging side accounted for the other 53 per cent, the same level as in 1994.
Clondalkin said that with 27 operating companies in five different countries, it was not surprising that the economic conditions experienced were not uniform. However, the strong organic profit growth in 1995 "demonstrates the success achieved by our managers in positioning operations to best effect", the chairman said.
While raw material prices increased in the first hall, they weakened in the last quarter. The operations performed well in that environment and operating margins were maintained at 8 per cent. And the omens on raw material prices are good as these are now declining.
Net debt increased by £18.4 million to £25.4 million with gearing at 39 per cent. This was due to investment expenditure of £24.7 million which was offset by cash flow from operations. Also, net interest costs increased from £1.2 million to £1.6 million reflecting the additional borrowings to support new investment, which included the purchase of Boxes Holdings.
Working capital requirements increased by £6.8 million, reflecting strong organic growth and higher raw material prices. However, reflecting real growth, earnings per share increased from 25.22p to 31.33p.
Clondalkin has not made any specific forecast for this year. The group tries to achieve organic growth of 10 per cent. It will also have the benefit of a 12-month profit contribution from Boxes, compared with four months in 1995.
It should, therefore, have little difficulty in recording a pre-tax profit of more than £21 million, representing 35p earnings per share, up from 31.33p. On this basis, the shares at 375p, are on a prospective price/earnings of 9.3.
