Mpact reaps benefits of investment programme


Mpact reaps benefits of investment programme

Published Date: 2019-08-08 | Source: Stephen Gunnion | Author: Stephen Gunnion

Mpact reaps benefits of investment programme

The packaging and recycling group says improvements to its business have more than offset the challenging trading environment.

Mpact is SA's largest paper and plastics packaging and recycling business. Its customers include fruit producers, fast-moving consumer goods companies and other consumer and industrial packaging companies. That means it's very much at the mercy of the economy.

However, instead of falling victim to the current malaise, it benefited from a five-year R3 billion capital investment programme. Paper mills were upgraded and it commissioned recycling bottle plants. It also acquired a collector and trader of recyclable material.

It says the improvements more than offset the effects of a challenging trading environment and unfavourable market conditions in the six months to end-June.

Revenue rose 4.2% to R5.2 billion and underlying operating profit increased by 29.4% to R218 million, largely due to improved containerboard margins. Underlying earnings per share were up by a quarter at 39.4c and headline earnings per share gained 28% to 39c. It raised its interim dividend by 20% to 18c per share.

The group said sales volumes of containerboard, which is used to make corrugated cardboard boxes, were likely to remain under pressure due to global supply and demand, which may affect profit margins in the second half of the year. It expects to mitigate some of the effects through cost savings, higher efficiencies and an improved product mix.

Its shares rose 8.2% to R20.04 yesterday.

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