Consol looks for acquisitions after strong results

South African listed glass container manufacturer Consol is looking for acquisitions in other African countries following a strong performance in the past financial year, Managing Director Mike Arnold…

South African listed glass container manufacturer Consol is looking for acquisitions in other African countries following a strong performance in the past financial year, Managing Director Mike Arnold said 5 September 2005. While Consol commands 75% of the glass container manufacturing market in South Africa, it has a limited presence outside the country. Commenting on the group“s results for the year to 30 June 2005, Arnold said that the company was pursuing acquisitions at a time of high growth for consumer packaging and related industries. He said the company was in talks on possible acquisitions in west and east Africa, although nothing had yet been concluded. Arnold said the company wanted the financial returns of its acquisitions to be commensurate with the risk of the country in question. “In addition to that, we want majority shareholding and management control of our investments. Our acquisitions have to meet these criteria,” he said. Consol has also said it plans to increase glass tableware products, a market which Arnold said remained attractive. The market currently relied on imports, he said. In the year under review, the company increased the capacity of its facilities in Bellville and Pretoria, bringing its total annual capacity to 620,000 tons. Another 150,000 tons of capacity would be commissioned in the next 18 months, Arnold said. In the year to June 2005, Consol“s earnings per share increased 4,6% to ZAR 1.097 while revenue grew 6.1% to ZAR 2.2 billion. The group declared a dividend of ZAR 0.39 per share. Arnold said the the results were achieved in spite of the effect of the strong rand on selling prices, input costs and export competitivity. He attributed the performance of the group to the rise in domestic consumption as lower interest rates and inflation led to an increase in disposable income. “Consumer demand for our key market segments, food and beverage glass packaging was slightly ahead of gross domestic product and disposable income growth rates of about 4%,” he said. The glass division, the largest contributor to group revenue and operating profit, increased its revenue 5.9% to ZAR 2 billion. Arnold said he expected real growth in earnings in the next financial year as consumer demand was expected to remain buoyant, in line with GDP growth. He said the key domestic food and beverage industries were expected to generate growth. Meanwhile, Consol has said that it would challenge the ruling from the Competition Commission that it pays a penalty of 10% of its annual export revenue, after the Commission found that the company had colluded with Nampak to fix cullet prices. He said the penalty for the offence should be based on the value of cullet, which amounted to about ZAR 30 million a year.