Winpak is a leading packaging company that manufactures and sells high quality packaging materials and packaging machines. The company has twelve manufacturing facilities in North America and its products are used in the food, beverage, pharmaceutical, medical and personal care industries.

Winpak is mainly active in the USA (~ 80% of sales 2020), Canada (~ 13%) and Mexico and others (~ 7%). The company’s three main packaging areas are: flexible packaging (53% of sales in 2020); Rigid packaging and lids (~ 43%) and packaging machines (~ 4%), which are also their business segments.

Packaging products for perishable foods and beverages accounted for more than 90% of sales over the past two years. Winpak’s customers include companies of all sizes. It is a sister company of Wipak, a leading European manufacturer of packaging materials.

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Plant data

Sales growth & market presence

Winpak started with a single unit in 1977, but has grown in many ways, both organically and through strategic acquisitions. The company is making good progress on the upstream integration of the recently acquired Control Group using Winpak Heat Seal-produced base materials. Winpak and Wipak will also come together in 2021 to launch Wiicare, a global commercial and technical organization for healthcare. The company is pursuing other new opportunities in healthcare.

Environmentally friendly packaging is the order of the day and is still the main driver in many markets. Winpak is also making large investments to expand production lines and modernize existing co-extrusion lines to enable cost-effective production of environmentally friendly structures.

These investments are expected to ramp up in 2021. The company also focuses on recyclable containers in flexible packaging and the introduction of PCR content or materials from renewable sources.

The catering industry was directly affected by the pandemic, which led to a slump in sales for the company last year. Selected applications for rigid containers and flexible packaging are still affected to this day. Grocery retailing increased in volume due to self-consumption and raw material input prices fell in the first half of the year.

Despite the pandemic, the volume of Winpak’s flexible packaging increased in 2020. The company said sales volume was slightly affected by the pandemic. The 2021 financial year saw volume and sales growth compared to the previous year. The company’s sales have increased more than 6% CAGR over the past decade.

Dividends

Winpak has a modest yield of 0.30% and a dividend payout ratio of just 6%. The company paid dividends of $ 5.8 million to its shareholders. It pays a regular quarterly dividend of $ 0.03 per share.

The last dividend increase of 9% was in 2014. The company also decided on special dividends in 2015 and 2014 of USD 1.50 and CAD 1.00 per share, respectively. Winpak’s earnings per share have increased more than 9% CAGR over the past decade.

Capital expenditures for the year are projected to be above 2020 levels and expected to be between $ 60 million and $ 70 million. Over the past ten years, Winpak’s CapEx has averaged more than 7% of sales. The company’s expansion plans are intended to support the new product line of biaxially oriented polyamide (BOPA). Winpak is also expanding its product portfolio with the installation of the infrastructure and production facilities for entry into the injection molded container and in-mold label market (in Sauk Village).

Winpak is ranked as a major supplier of packaging materials and machinery to customers in the food, beverage and healthcare industries. Over 90% of sales come from food and health markets that are resilient to the economic cycle. As such, it has consistently strong cash flow from operations.

The company’s acquisition of Control Group will help strengthen its position in the healthcare print service model and develop broad medical representation of the WIPAK and Winpak product portfolios. The acquisition was financed with cash.

Winpak’s strategic alliance with Wipak also grants global access to packaging expertise and offers a wide range of products and packaging solutions worldwide.

Winpak (WPK) historical dividend yield
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competition

CCL Industries is also active in the North American packaging and container industry. CCL Industries is the clear market leader because of its huge business size and global reach, while Intertape Polymer is a leading developer and marketer of packaging and protection solutions for industrial and retail customers. IPL Plastics and Richards Packaging are other major competitors. The manufacturing costs of Winpak are influenced by the prices of raw materials.

Bottom line

Sales activity has shown signs of recovery in the hospitality and hospitality sectors from 2021, and in grocery retail, volumes have benefited from the shift towards increased consumption of meals at home. Winpak directs future investments towards the expansion of existing and new technology capacities in extrusion and processing.

As a leading player, Winpak has developed the necessary know-how to develop innovative, high-quality materials and cost-effective manufacturing. It should continue to benefit from increasing consumer behavior and a growing awareness of sustainable packaging.

Winpak (WPK) historical Pe
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