Mpact wraps up strong year for paper


Mpact wraps up strong year for paper

Published Date: 2019-03-14 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

Mpact wraps up strong year for paper

The paper and plastics packaging group benefited from an upgrade at its Felixton mill, lower recovered paper costs and rising containerboard prices.

Mpact's Paper business has more than offset a difficult year for Plastics, supported by an upgrade at its Felixton mill in KwaZulu-Natal and increased sales of corrugated packaging.

The paper and plastics packing group grew revenue from Paper by 7% to R8.3 billion in the year to end-December as external sales volumes, excluding recycling, increased by 3.7%. It grew production of containerboard following the Felixton upgrade and sold more packaging for citrus fruit, avocados and bananas. This was partially offset by declines attributable to the drought in the Eastern and Western Cape. Underlying operating profit rose 57% to R694 million as margins improved as a result of lower recovered paper costs and higher global containerboard prices.

The Plastics business was affected by the impact of the sugar tax on preform sales, while demand for crates and jumbo bins was also down. It said the delays in turning the performance of its PET recycling plant around were disappointing. Segment revenue fell 3% to R2.4 billion and its underlying operating profit fell 29% to R49.5 million.

The balance sheet of Mpact Polymers was restructured during the year with support from the Industrial Development Corporation (IDC), the other shareholder in the business. As a result, the IDC has increased its shareholding by 10% to 31% and R146 million of senior debt was converted into an interest-free loan.

As a whole, the group reported a 5% rise in revenue to R10.6 billion in the year to end-December, while underlying operating profit jumped 47% to R672 million. Underlying earnings per share grew 25% to 208c and headline earnings rose 19% to 195.6c. It's declared a total dividend of 70c per share for the year, up 27%.

Its shares ended 0.5% up at R23.63 yesterday.

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