Mpact to roll out higher earnings


Mpact to roll out higher earnings

Published Date: 2019-02-06 | Source: Stephen Gunnion | Author: Stephen Gunnion

Mpact to roll out higher earnings

The packaging and plastics group expects underlying earnings to much higher thanks to a strong showing from its Paper division.

A continued strong performance from its Paper division has resulted in strong growth in full-year earnings from Mpact. However, that's been offset to some extent by a decline in its Plastics unit.

In a trading statement, the packaging group said revenue for the year to end-December was likely to be about 5% higher, with earnings before interest, tax, depreciation, and amortisation (EBITDA) rising by up to 50%. EBITDA is generally used as an indicator of a company's operational performance. The group faced special items of R53 million over the year, related mainly to an impairment charge and restructuring charge.

While headline earnings per share (EPS) would rise by between 15.5% and 21.6%, it said its underlying EPS would be as much as 28.1% higher than those reported in 2017. Underlying EPS exclude special items that aren't reflective of the underlying business performance of a company.

While it provided no further detail in yesterday's update, at the end of its June half year it said Paper had benefited from an upgrade to its Felixton mill in KwaZulu-Natal as well as macroeconomic factors such as Chinese policy interventions on recovered paper and a good citrus crop. Plastics was affected by lower sales volumes because of declines in preforms, crates and jumbo bins. Preforms, such as bottles and jars, were impacted by the introduction of the sugar tax. Crate sales reduced due to subdued demand and the end of a supply contract in January, while jumbo bin sales were impacted by the drought.

At the half-way stage, headline and underlying earnings were lower, implying a much improved second half for the group.

Its results will be released on or about 13 March. Its shares closed 12% higher at R23.84.

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