Consol sells plastics operations

South Africa“s Consol has fulfilled longstanding plans to sell its marginal plastics businesses in favour of its main business, glass.
Consol said 19 June 2006 that it had sold its Plastform unit to…

South Africa“s Consol has fulfilled longstanding plans to sell its marginal plastics businesses in favour of its main business, glass. Consol said 19 June 2006 that it had sold its Plastform unit to plastic packaging group Astrapak and its Consol Flexibles unit to unlisted Polypak. In a trading update, Consol also said that turnover of ZAR 2.03 billion from its glass operations in the 11 months to the end of May 2006 was 12.9% higher than in the previous financial year, while the turnover of its plastics business had fallen 7.3%. Operating profit was hit by the strength of the rand and the higher input costs of soda ash, energy and distribution. The company expected headline earnings growth for the 12-month period of 0% to 5%. Annual results are due in the first week of September. The group has kept its Rigid Plastics operation, a businees that Astrapak would have been keen to acquire. Rigid Plastics makes pharmaceutical packaging, a key growth area for the plastic packaging sector. Consol MD Mike Arnold said Plastform and Flexibles did not meet the group“s investment criteria, hence the decision to sell. Proceeds from the disposals will be invested into expanding glass production capacity by 25%, which is already under way. Consol did not disclose the value of the sales, but the combined turnover of the three plastics units is about ZAR 300 million. The sale of the flexibles plant was effective from the end of April 2006, while Plastform“s sale would be concluded only by the end of June 2006, subject to approval by competition authorities. Consol“s plastics businesses account for only 9.7% of its turnover and 3% of total profit.