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Based in Melbourne (Victoria) we deliver business valuations all over Australia using expert business valuers and resources that allow us to work remotely.

We have completed:

Contact Us

L3/162 Collins St, Melbourne, 3000

0421 069 717

m.williams@exitvalue.com.au 

Plastics Manufacture Business Valuation Issues

The plastics manufacturing industry seen a lot of cahnge over the past two decades.  It has to face:

  • Changing technology for manufacturing processes (including digital printing)

  • Low cost of manufacture from overseas competitors

  • Lowering of import tariffs exposing industry to global competition

  • Reduced demand from a downturn in manufacturing

  • Increased labour costs in Australia

In general the industry operates with:​

  • High degree of competition from overseas low-cost producers

  • High capital cost

  • High raw material costs (fluctuates with price of crude oil)

Profitable plastics manufacturers have explored opportunities such as:

  • Co-location with large customers (eg in the automotive sector)

  • Design of own products

  • New high-technology automation, including 3D printing

  • Specialisation in particular market segments

  • Large volume projects

Most plastics business valuations will attract similar EBITDA multiples to that of manufacturers as long as there is some market differentiation, effective use of technology and economies of scale.

Key Drivers of Plastics Manufacture Business Valuations

Key Industry Statistics

There is no single industry category that covers plastics but is spread out over several sectors.  According to IBISWorld, key statistics for the relevantindustries include:

 

We have collated industry performance statistics based on ABS data and detailed them in a whitepaper, which can be downloaded from the link below.

What Makes a Business Highly Valuable?

SME Performance Whitepaper

A plastics business valuation is driven by key factors below such as: 

  • Size and diversity of client base and scale of operations

  • Low labour costs per unit of production

  • Level of ongoing clients and long term client agreements

  • Technology used in manufacturing

  • Level of differnetiation and product development

  • Certification to relevant quality, OH&S and environmental standards.

EBITDA Margins are very low and range from less than 4% to 25% (for some large manufacturers), depending on the size of the business, industry competition, technology and automation and productivity.

EBITDA Multiples for most plastics businesses will remain low, and will be heavily influenced by size and scale.  Typical EBITDA Multiple ranges we have observed are:

  • Revenue of $1m - $10m: 0.5x - 2.5x

  • Revenue of $10m - $20m: 2.0x - 4.0x

  • Revenue greater than $20m: 4.0x - 5.0x

Our Business Valuation Experience

Our plastics business valuation experience has included including business valuations for:

  • Regionally based rotational moulding plastics manufacturer with own products

  • Injection moulding manufactuiring business with three year client agreements and own products

  • Extrusion moulding plastics business supplying automotive industry