Goodpack's profits climbed 13.4% to US$51.3m

Thanks to better cost savings initiatives.

According to OCBC Investment Research, Goodpack’s FY13 results came in within expectations. Although revenue grew by a smaller 7.7% YoY to US$190.9m (versus 11.7% YoY in FY12) following a slowdown in the rubber demand, PATMI improved 13.4% YoY to US$51.3m (net margins +0.6ppt to 27.3%) as its cost saving initiatives helped to keep logistic and handling costs in check and offset higher depreciation and financing costs from a larger fleet and increased borrowings respectively. 

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Similar to last year (FY12), management declared a final dividend of 2 S cents and a special dividend of 3 S cents.

Top-line growth to improve in FY14. Entering FY14, we expect top-line growth to pickup following the commencement of key clients’ synthetic rubber (SR) operations in Singapore and a new SR contract in Russia. In addition, the potential of a boost from the automotive segment remains.

A lid on opex & financing costs. Despite having a larger IBC fleet, we only expect margins to come off slightly. The group has demonstrated its ability to keep a lid on the main opex component of logistics and handling costs and FY14 should not be an exception.

Coupled with the shift towards purchasing a larger proportion of new IBC requirements as well as some existing leases, leasing costs should also taper off gradually. As for financing costs, the bulk of its debts have fixed rates so we are unconcerned over a potential hike in rates.