Pratt puts Visy in box seat for $1bn profit
BILLIONAIRE Anthony Pratt has revealed that his empire will generate more than $1 billion within the next five to seven years.
BILLIONAIRE paper and packaging magnate Anthony Pratt has revealed that his global empire will generate more than $1 billion in earnings within the next five to seven years as it expands further into Asia and the US.
Established in Melbourne in 1948, Visy today employs more than 9600 people across its Australian and US operations (where it is known as Pratt Industries USA). Seventy per cent of its customers are in the food and beverage sector.
The latest IBISWorld Top 500 Private Companies list, published in today’s edition of The Deal magazine for the first time, reveals that Visy is now the nation’s biggest private company, ahead of retail franchise group 7 Eleven and dairy co-operative Murray Goulburn.
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Mr Pratt, Visy’s executive chairman, told The Deal that the sales of Visy’s combined global operations this year would be $4.8bn, up from $4.1bn last year.
“A combination of things have driven the increase — our American business is doing very well; our Australian exports have been very strong on the back of greater production in the mills, as well as strength in the primary packaging market,’’ he said.
In five to seven years, Mr Pratt wants group turnover to grow to $10bn and reveals that earnings before interest, tax, depreciation and amortisation (EBITDA) will then be more than $1bn.
Earnings are now said to be over the $750m mark but these are never publicly disclosed.
“The demand remains very strong, especially in America. The US is booming,” he said.
“Business here (in Australia) is very good, very strong.”
Mr Pratt said the focus was on standardising the leadership and processes across both the Australian and US businesses.
“We are trying to create a one-team approach between the two countries. The thesis of backing excellent people applies equally to both countries,” he said.
Mr Pratt ran Pratt Industries for nearly two decades before he returned to Australia from the US to take over as Visy executive chairman in 2009 following his father Richard’s death from prostate cancer.
Since then he has been remaking the company in his own image.
Two years ago he hired a former long-serving Visy executive, John Wheeler, as chief executive to slash Visy’s cost base.
The pruning is said to have put the group in a strong position to weather the high Australian dollar.
Then last year he created the new position of Visy global chief executive and appointed well-regarded Pratt Industries chief executive Brian McPheely to the role.
Mr Pratt has also been reshaping the family advisory board, which includes his two sisters Heloise and Fiona, who both have a one-third stake in Visy.
Mr Pratt himself owns the remaining third.
He recently recruited former Nestle Waters North America CEO Kim Jeffery to the board.
“Kim brings an extensive range of business contacts globally and an important large customer perspective to the group,” Mr Pratt said.
Last year he also recruited former US ambassador to Australia, Jeffrey Bleich, to the board to help with the US expansion, as well as long-time Packer family lieutenant Ashok Jacob.
Former Macquarie Group chief executive Alan Moss and the former chairman of ANZ National Bank in New Zealand, Dryden Spring, quietly stepped down from the board last year, as did former Visy chief executive Chris Daly. “Ashok and Jeff are the best in their respective fields and we are grateful and privileged to have them on our board,“ Mr Pratt said.
The other external member is London-based venture capitalist Ross Fitzgerald, Mr Pratt’s best friend and closest confidant.
There are six executives on the board including Mr McPheely, Mr Wheeler and Visy group finance director Vin O’Halloran.
Mr Pratt has also been focusing the company on Asia and plans to double the revenues Visy generates from Asia over the next decade by setting up manufacturing plants in a raft of Southeast Asian countries.
It is also using a trading company in Singapore to sell more products to meet demand in the region.
“Over the past five years we have been focusing on Asia. It now constitutes about 10 per cent of our EBITDA and the goal is to get that to about 20 per cent,” he said.