Mpact reports mixed results: HEPS down, revenue up in challenging market

Mpact’s headline earnings a share (HEPS) from continuing operations will likely decline between 28% and 18.2% in the six months to June 30, even though revenue should increase by about 3%.

The JSE-listed paper and plastics packaging group said in a trading statement on Wednesday that HEPS is expected to be between 88 and 100 cents per share, compared with 122.2 cents at the same time last year, in a persistently challenging trading environment.

The group said uncertainty in local and global markets had contributed to poor business sentiment, despite that lower interest rates and lower inflation, and consumer demand remained weak. The detailed half-year results are expected to be released around August 4, 2025.

Mpact directors said, however, they were making “good progress” on development projects that focus on growth sectors and investments in innovative, higher-margin, and sustainable products. “We remain confident in our value-enhancing strategy and future prospects,” they said.

Revenue in the Paper business was up by about 7% due to higher containerboard sales volumes, partially offset by lower cartonboard and corrugated sales volumes. No commercial downtime was taken at Felixton and Mkhondo paper mills in the first half.

Containerboard sales volumes increased due to growth in exports and market share gains in the local market, while carton board sales volumes were lower due to weak local demand and lower-priced imports, which resulted in some commercial downtime at the Springs paper mill.

Corrugated sales volumes were down due to weak industrial demand. Despite an overall increase in revenue, higher recovered paper prices, energy, and fixed costs resulted in lower operating profit for the Paper business.

The Plastics business saw revenue fall by about 15% compared to the prior period. As anticipated, FMCG (fast-moving consumer goods) Wadeville's sales volumes were down "significantly" due to the expiration of two contracts with a major customer last year.

“Although the business has been able to find replacement customers for some of the lost volumes, the uptake has been slower than anticipated. Sales volumes were also down in Bins & Crates, mostly due to lower beverage crate sales, which were somewhat offset by good growth in agriculture crates,” the directors said.

Historically, Bins & Crates' sales and profitability have been heavily weighted towards the second half of the year, and the trend is expected to remain the same this year. Both FMCG Pinetown and Atlantis experienced good sales volume growth, due to new projects and growth from existing customers.

Group earnings before interest, tax, depreciation, and amortisation (EBITDA) were expected to decrease by about 15% compared with R731 million at the end of June 2024, and underlying operating profit by about 26% compared with R423m in June last year. Net debt decreased to about R2.99 billion from R3.23bn in the prior period.

Mpact’s share price fell slightly by 0.08% to R24.90 on the JSE on Wednesday afternoon - the price had trended downwards from R28.76 a year ago.

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