IPL, which was set up in 2005 as a spin-off of the Irish Agricultural Wholesale Society (IAWS) and was formerly known as One51, has seen its net profit plunge by 90% from C$22.7m (€15m) in 2017 to C$1.8m (€1.2m) last year.

Operating profits fell 62% to C$12.9m (€8.5m) for the year ended 31 December 2018. This is despite the company reporting a 22.7% rise in revenue to C$657.8m (€433m) for 2018.

The plastics company has blamed rising resin prices and increased distribution costs for the weaker performance despite increased revenues.

Flotation

In the past year, the company has spent almost C$10m (€6.6m) on floating the company on the Toronto stock exchange along with C$27m (€18m) spent on restructuring and integrating businesses over the last two years.

Since shares have moved from the unregulated grey market to floating on the stock exchange, the share price has fallen 20% from C$13.50 when first listed to levels hovering around C$11 this week.

This has seen more than C$128m (€84m) wiped off the company since the IPO. This means that Irish co-ops including Dairygold, Kerry and Lakeland, which currently hold 20% of the company, have seen the value of their investment fall by a combined C$35m (€23m) in recent months.

Satisfactory

IPL CEO Alan Walsh said: “The results were satisfactory given the sustained increases in resin, labour and freight throughout the year and the significant level of restructuring initiatives completed to transition to a fully listed public company.”

The company said it will acquire tooling and plastics manufacturing business Loomans, which is headquartered in Belgium, for €75m or 7.7 times earnings. The acquisition will be funded from existing cash resources and credit facilities. There have been significant changes in the IPL management team since the IPO as more of the operations and management move to Montreal.

Comment: floating company sinks shareholders’ investment

The perceived need by the company to move away from an unregulated grey market that had been performing in recent years to float on a regulated stock exchange seems to have failed to deliver for shareholders.

Even the CEO Alan Walsh said last November that he “wouldn’t recommend” listing a company in Canada and doesn’t think he would do it again. His comments came after a roadshow which outlined the merits of a flotation. Unfortunately, it is the shareholders who again have to wait for the promised landing of their One51 investment. They have watched it transition from an investment company to a recycling business to a now mainly North American plastics business.

Not to mention the $37m cost of floating and integrating the company, and a depleted share price. Questions need to be answered by the company and its board.