Durban - Declining demand for plastic bags had been countered by the rationalisation of Transpaco's carrier bag manufacturing divisions into two sustainable plants, Phillip Abelheim, the chief executive, said yesterday.
This follows the retrenchment of 50 people and the closure of one plant last month as a result of the falling demand for bags since the new regulations were implemented in May.
Recycling has been identified as a growth area and the company has committed R13 million to this. Transpaco, which employs 600 people, recycles more than 800 tons of plastics each month.
"We have taken cognisance of the drop in demand in our budgets for 2004 but we are confident that we will achieve an earnings growth for the current financial year," Abelheim said.
Transpaco last week reported a 50 percent rise in profit after tax to R17.76 million for the year June. This translated to a 61 percent growth in earnings a share to 59.8c from 37.1c previously.
Abelheim said the price war on plastic bags between retailers was not surprising.
"We met all the major retailers and agreed that if they subsidised the price of bags we would cut it from 32c to 29c and Pick 'n Pay took advantage of our offer."
The move was good for everyone concerned because it boosted demand for bags.
Transpaco closed unchanged at R3 in Johannesburg yesterday.