Reversing the recent trend towards public listing of packaging companies, Irish flexible packaging group Clondalkin has made a healthy recovery in recent years, proving that its delisting from the stock exchange has worked, according to a report in the Irish Times.
Three years after the company's management team took the decision to go private, Clondalkin is reducing its debt and delivering what analysts have termed a solid performance.
In recognition of its improved performance Moody's Investor Services has just upgraded the company's debt rating, citing the company's track record to date and its ability to generate strong cashflow to pay down its debt.
The management buy-out, the first of an Irish plc, was backed by British private equity group and cost around €475 million when Clondalkin's existing debt was taken into account. According to the report round 75 per cent of this was debt finance.
The company's packaging business looks in reasonable shape despite the downturn, with Moody's expecting annual growth rates for the business as a whole to be in the low single digits.
This steady performance has meant that Clondalkin has been able to knock back its debt level from €350 million to €332.8 million in the first six months of this year. The company has also been able to maintain its acquisitive policy and in April this year purchased the European food packaging group EPH.
Clondalkin has reported that in the 12 months to 30 June, it had total revenues of €716.9 million and earnings before interest, tax, depreciation and amortisation (EBITA) of €89.6 million. This compares to sales of €711 million and EBITA of €81.7 million in the 12 months to end-December.
However, the situation is by no means rock steady and Moody's has warned that Clondalkin remains exposed to foreign exchange movements and price fluctuations in raw materials costs, particularly in polymer prices which are tied to oil levels.
On the plus side, Moody's also points to the company's 'strong product and customer diversification' which it believes will offset the negative impact of a weaker economic environment.