Strong start to H2 as demand returns
COVID-19 has impacted businesses in many different ways. However for specialist high speed packaging & automation solutions provider Mpac, we think the pandemic will prove to be a long-term positive. Why?Well the lockdowns have already started to accelerate both the reshoring of US production back from China (re supply chain disruption & US tariffs), and the adoption of the company’s expanding suite of Industry 4.0 solutions, such as remote diagnostics, virtual machine testing/commissioning & augmented reality training.
H1’20 turnover fell 20% (-32% LFL) to £36.6m YoY, due to deferred shipments, tough comparatives (record H1’19 of £45.8m) and difficulties accessing client sites. Yet equally no orders have been cancelled, whilst operating margins came in at a healthy 7.1% (adjusted EBIT £2.6m), thanks to favourable mix. Higher spare part volumes drove service revenues up +30% YoY - equivalent to 26% sales vs 17% LY. Moreover order intake declined by only -6% to £30.5m (£32.6m LY), underlining the natural resilience of their core markets: namely Healthcare (eg GSK, CooperVision, Bausch+Lomb), Food/Beverage (Ice-cream, popcorn) and pharmaceuticals.
Elsewhere, net funds closed June up £4.5m to £22.5m (or 112p/share vs £18.0m Dec’19), benefitting from tight working capital control (£3.5m inflow) and cash collection (re debtor days at pre CV19 levels). All told, providing plenty of fire-power in the event suitable M&A opportunities become available at attractive prices.
Mpac Group is focused on its Packaging Machinery business, Mpac Langen, which designs, precision engineers and manufactures packaging solutions, machinery and high specification automation, secondary packaging equipment and end-of-line robotics and at-line instrumentation and testing solutions as well as providing solutions including the design and integration of packaging systems.
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