A small Fullerton company that began making plastic paint pails eight years ago has quietly positioned itself as a contender for leadership in what could become a multibillion-dollar industry.
And not content with the possibility of dominating the domestic market for plastic shipping containers, Ropak Corp. now is expanding its reach into the Far East.
With the purchase of Tokyo Kaken Co. Ltd., a small Japanese producer of plastic floats for fishing nets, Ropak is continuing a flurry of buying that has netted it five acquisitions in two years, including two in the last week. William Roper, the company's chairman and chief executive, says he intends to make at least two more acquisitions within the next year.
On June 30, the company, which has plants in several major regions of the United States and Canada, completed the purchase of D & D Container Corp., a small Texas-based producer of plastic containers. The Tokyo Kaken purchase agreement was signed July 1.
Roper, who has been involved in the plastic container industry for more than two decades, said he has taken the company on the acquisition path primarily to reduce shipping costs by establishing operations within the regions the company serves.
Income Doubled Since '83
The growth strategy also has more than tripled sales and nearly doubled income since 1983. One analyst who follows the shipping container industry said Ropak, by concentrating only on plastic containers while its chief competitors continue offering metal or fiberboard containers as well, is poised to become the industry leader as plastic continues to increase its share of the market.
Plastic containers--first introduced in the 1960s--currently account for only about $250 million in annual sales, said Arthur Charpentier, an analyst with Goldman Sachs & Co. in New York. He said, however, that their acceptance has increased steadily and that they should continue increasing their market share in the multibillion-dollar shipping-container industry.
Charpentier, an unabashed fan of Ropak, said in a recent investment analysis report that the company is one of six market leaders in the plastic shipping container segment and that, as the only company dealing exclusively with plastics, it "simply does a better job."
While plastic containers are more expensive than their metal and fiberboard counterparts, they are more serviceable.
And Ropak's strategy of growth through the acquisition of regional companies has helped it keep a lid on product costs, not only by cutting the cost of shipping product to Ropak's customers, but, Roper said, by avoiding "the losses normally associated with cold start-ups."
Despite a $12,000 loss in the fourth quarter of 1985--pinned on a cyclical lull in the agricultural industries serviced by the two companies it acquired that year--Ropak posted net earnings of $1.3 million for the year, up 125% from $577,000 in 1984. Revenues of $32.2 million were up 119% from $14.7 million in 1984.
For the first quarter of this year the company's net earnings of $186,000 were down 40% from $312,000. Ropak officials said at the time that earnings for the 1985 first quarter were inflated by a one-time currency exchange gain of $136,000 taken in the acquisition of a Canadian company. Without that gain, first-quarter 1985 earnings would have been $126,000, or 32% below the 1986 first-quarter figure. And revenues for the first three months were up 43% to $8.3 million from $5.8 million in 1985.
Ropak was founded in 1978 in La Mirada by Roper and his brothers, Robert--the company's president and chief operating officer--and C. Richard, vice president of engineering and corporate secretary. The three started the company with $750,000 raised from family funds and several private investors. The Ropers moved their corporate headquarters to Fullerton in 1984.
The company went public in December, 1981, but it wasn't until mid-1983 that a market developed for the company's stock, which began selling at about $2 a share, Roper said. Its common stock currently sells in over-the-counter trading for $19.25 per share.
Roper declined to discuss his expectations for the company's earnings for the rest of the year but did say he anticipates that the company's latest acquisitions will boost Ropak's sales by approximately 20% in each of the next two years--to $50 million this year and $60 million or more in 1987.
Investment analyst Charpentier said the company's acquisitions should have no adverse impact on Ropak's financial performance. The deals, he said, all were "pretty well thought out" and should not weaken the company.
He said the plants that Ropak has obtained should enable the company to make inroads into new markets.