December 8, 2023

Revenue (2021) US$1 billion | Profit US$106.3 million

One-year share price gain 9.5% | P/E ratio (trailing) 16.1

In many ways, supermarkets and households are ground zero for economic and environmental upheavals. It’s there we decide what to buy, consume and throw away. “You just walk into a grocery store, and you see all our packaging,” says Winpak vice-president and chief financial officer Scott Taylor. That includes shelves with meat, cheese, bacon, cat food, yogurt lids, condiment containers and much more. About 90% of the company’s sales are to the food and beverage industries.

Of course, packaging is now a hot-button issue. “It’s all about sustainability,” Taylor says. So, Winnipeg-based Winpak has set aggressive goals in its annual sustainability reports. By 2025, it wants to have 100% of its sustainable product portfolio available, which includes packaging that’s made with post-consumer recycled content (PCR), that’s recyclable, or that’s made from bio-sourced materials such as starch-based plastics based on potatoes or peas.

Can a packaging company make money and stay onside with environmental, social and governance concerns? Over a history stretching back to 1975, Winpak has done both.

Taylor delivers a rapid-fire timeline. Winpak IPOed in 1986 (the chairman of its Finnish parent, Wihuri International Oy, retains a 52.7% controlling interest) and then made five key acquisitions from 1988 to 1997. Growth since then has been almost all organic, although in 2019, the company bought New Jersey–based Control Group for US$42.2 million to diversify into pharmaceuticals and cosmetics.

Winpak now has 12 manufacturing facilities in Canada, the United States and Mexico. Sister company Wipak, controlled by the same parent, takes care of Europe. Winpak has some large rivals, including Amcor PLC and U.S-based Sealed Air Corp. But Taylor says the overall packaging market isn’t growing much, so Winpak is trying to win customers by servicing them better and offering superior products.

Financially, Winpak has grown steadily, and profits have exceeded US$100 million over each of the past six years. That included strong results during COVID-19. Consumers started cooking more at home and ordering in more, but Winpak’s airline, restaurant and hotel businesses cratered.

Those trends have reversed somewhat. But like manufacturers in many sectors, Taylor says Winpak has confronted a “three-headed monster” recently—inflation, labour shortages and global supply-chain disruptions.

The result of all those whirlwinds? Winpak shares have basically moved sideways since 2015. Taylor thinks the price “should be $45 to $48.” Some analysts are even more bullish. CIBC Capital Markets recently set a 12- to 18-month target of $52. Taylor is happy to email me the report.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.


Leave a Reply

Your email address will not be published. Required fields are marked *