The Pact Group Holdings Ltd (ASX: PGH) share price has surged 4.48% in early trade on the announcement of Sanjay Dayal as the company's new CEO and Managing Director, effective 3 April 2019.
What did Pact Group say in this morning's announcement?
The company announced that Mr Dayal will join Pact from BlueScope Steel Ltd (ASX: BSL) where he was Chief Executive, Building Products, Corporate Strategy and Innovation. Mr Dayal has previously held senior positions across Asia and Australia during his 9 years at BlueScope, and brings prior experience with Orica and ICI.
Mr Dayal has been appointed on a rolling contract, with his total remuneration including both fixed and at-risk components to ensure alignment with all shareholders.
What challenges are facing the Pact Group?
Mr Dayal joins the company after it has seen its share price plummet 20% so far this year on downgraded earnings guidance and significant asset impairments.
The company cited difficult trading conditions and a revised long-term outlook for the company's Australian businesses as it announced the recognition of non-cash impairment charges in the range of $310 million to $340 million after tax in its half year accounts.
The charges comprise $90 million to $100 million for its Australian packaging assets and $220 million to $240 million for Goodwill in Australia.
The company also reported a 9% decline in earnings before interest, tax, depreciation and amortistaion (EBITDA) for the half-year with full year guidance of $230 – $245 million (compared to $237 million in FY18).
Is Pact in the buy basket?
This morning's announcement is a big plus for the company as it looks to shore up its long-term outlook and improve its operational efficiency.
In terms of comparables, fellow Materials peers, the Orora Ltd (ASX: ORA) share price is down 2.0% while Amcor Limited (ASX: AMC) has climbed 14.8% on strong earnings and a stable growth outlook.
Given a new leadership direction and significant restructuring, I think Pact could be good value at its current market price but I would be waiting for its full-year earnings before buying.
In the meantime, those looking for something a little more interesting than packaging should check out this top-rated stock in a booming industry could give you the edge as a growth investor.
