AMG Packaging looks to further expansion projects
Box maker AMG Packaging and Paper Company is pursuing another round of expansion just a year into the commissioning of its new factory on Retirement Crescent in the Corporate Area.
The company was at a crossroads earlier this year on whether to pay dividends or expand its operations, but the board has voted on the latter, and AMG will move forward with the expansion in 2024.
“Our ambitious plans include investments in new machinery, expanded facilities, and cutting-edge technologies. These initiatives are geared towards fortifying our position as an industry leader and ensuring sustained growth for years to come,” Managing Director George Hugh said in the opening statement to the company’s 2023 annual report.
The company has its eyes on a new Flexo-Folder, Flexo-Slotter, and Auto-Folder gluer, along with a buildout of an additional 10,000-square-foot warehouse. The basic purpose of the flexo folding and glueing inline process is to produce cardboard cartons in a single pass. The integrated system will feed and print the cardboard in several colours, then die-cut, fold, and glue it to produce a finished box.
Hugh said the company is also far advanced in discussions for the purchase of a new ERP system aimed at improving sale numbers and internal efficiencies.
“While these discussions are preliminary, they could shape a future expansion of momentous proportions. Finally, we are also looking to deepen relationships with paper mills internationally to ensure consistency of product and better pricing,” he said.
The company’s plans for expansion come within a context of rising demand for cardboard boxes, alongside some normality in shipping prices and paper supply since the start of the year.
AMG Packaging, among other cardboard manufacturing and distribution companies, was faced with paper shortages on the world market as well as increases in freight costs, which not only drove up production costs but weighed on production output during the height of the pandemic in 2021 and 2022.
“Raw material issues have abated somewhat and there has been a stabilisation of paper prices and availability internationally, which has allowed us to be able to maintain and even reduce pricing in a few instances to attract a newer and larger customer base,” Hugh said.
AMG’s appetite for greater automation in its production processes follows the doubling of its production capacity through investments to the tune of $100 million. The company, which has manufactured boxes for more than 15 years using virgin paper as input, estimates its market share at around 30 per cent, but is looking to move closer to 50 per cent through the expansion of its business.
Its plant investments have already driven down manufacturing costs by 3 per cent for the 2023 financial year, moving from $712 million to $690.3 million, mainly due to the increased efficiencies in its production processes.
“Looking ahead, we are poised for even greater achievements… As we celebrate our current successes, we are resolute in our commitment to fostering sustainable growth. The board remains dedicated to exploring strategic opportunities and optimising our operations to deliver long-term value to our shareholders,” Hugh said.
AMG Packaging made earnings of $89.3 million for the year ended August 2023, 14 per cent lower than $104 million it made a year earlier. However, revenues grew marginally to the $1-billion mark.
AMG closed the year with cash resources of 296.7 million, an increase of 142.2 per cent when compared to $122.5 million in 2022. The main contributory factor is the decrease in inventories which has been converted to sales, the company said.
Hugh added that the company has maintained a robust cash balance, providing it with the flexibility to self-invest in future projects.
“Furthermore, our conservative approach to debt management ensures that we have the ability to access capital if needed, positioning us strategically in the dynamic economic landscape. Our financial position is robust, and we are pleased with the upward trajectory of our growth,” he continued.