MPACT's revenue in the Paper business for the 2025 financial year increased by 7.4% to R11.8 billion due to increases of 4.3% in sales volumes and 1.6% in average selling prices, and the acquisition of Seyfert in the Western
Image: Antoine de Ras
With no let-up in sight for the weak economy in the short term, paper and plastics packaging group Mpact has paid out a final dividend of 30 cents, less than half of last year’s 75 cents, while it moves to close its Springs cartonboard mill.
CEO Bruce Strong said 2025 had been a demanding year. While overall performance was mixed, progress was made to strengthen Mpact's position through capital investment, portfolio optimisation, and operational improvements.
Economic pressure and sustained difficult trading conditions across several of the group’s markets saw headline earnings per share fall to 307 cents in the year to December 31, down from 324 cents in 2024.
The group plans to close the Springs mill, which forms part of its Paper reporting segment, mainly due to weak markets and cheaper imports, and affecting some 377 employees. The mill is likely to run until the end of May 2026.
Strong said consumers face intense financial pressure affecting demand, while widespread municipal infrastructure shortcomings are driving additional costs across manufacturing operations. At the same time, an influx of imported products is placing strain on several domestic industries, including many of Mpact's customers. There were few signs of any meaningful improvement in the short term, he said.
“With the bulk of our major investment cycle completed, including commissioning the Mkhondo mill upgrade, we are shifting focus to converting the asset base into stronger earnings, cash generation, and improved returns,” said Strong.
Major projects undertaken to optimise the business include the Mkhondo mill uprgade, which is now substantially completed, with a new pulp digester and sodium-lignosulphonate (SLS) plant commissioned and capitalised.
Versapak was sold in November 2024. The restructuring of FMCG Wadeville is largely complete, with the business focused on higher-margin products.
Strong said from an industry perspective, global oversupply of containerboard and cartonboard has led to lower margins and intensified competition from imports. These headwinds were offset by robust growth in the fruit sector and improved efficiencies across most of Mpact's businesses.
Record citrus export volumes in 2025 validated a focus on investing in export-oriented growth sectors.
Good volume growth was seen in containerboard, citrus cartons, jumbo bins, agricultural crates, and Plastics FMCG (excluding Wadeville), supported by recent investments at the Felixton mill, Bins & Crates, and Paper Converting operations.
These gains were partially offset by lower volumes in cartonboard, industrial corrugated packaging, Plastics FMCG Wadeville, and beverage crates.
In the Paper business, sales volumes increased, contributing to higher revenue, but margin pressure resulted in a decline in operating profit.
The reduction in Paper's profitability was attributed to Paper Manufacturing. The Paper Converting business reported a notable increase in operating profit.
Despite lower sales volumes, the Plastics business saw a significant increase in operating profit, supported by an improved product mix, lower input costs, and improved performances from all the Plastics businesses.
In support of broader energy resilience and cost-efficiency objectives, solar PV generation capacity reached about 18MWp, delivering electricity cost savings of over R45m compared to power that would otherwise have been purchased from municipalities or Eskom.
“These initiatives mark a clear shift from investment-led growth to disciplined value realisation, with the group increasingly focused on optimising returns from its modernised asset base, improving cash generation, and delivering sustainable shareholder value,” Strong added.
Group revenue from continuing operations for the year increased by 5% compared to the prior year to R14 billion, primarily driven by increased containerboard and agricultural packaging sales volumes in the Paper business.
Revenue in the Paper business increased by 7,4% to R11,8 billion due to increases of 4,3% in sales volumes and 1,6% in average selling prices, along with the acquisition of Seyfert. Gross profit was up approximately 1.7%.
The outlook for fruit exports remains positive, and further efficiency improvement benefits are expected across the Paper Converting business in 2026. On August 1, 2025, Mpact increased its shareholding in Seyfert Corrugated Western Cape from 49% to 74%.
Seyfert manufactures and distributes corrugated packaging products, mainly to the agricultural sector.
Revenue in the Plastics business fell by 7,5% to R2,16bn, largely due to lower sales volumes at FMCG Wadeville, as anticipated, as well as lower beverage crate sales in Bins & Crates.
However, this was more than offset by a favourable product mix and higher average selling prices, which resulted in a 7,8% improvement in gross profit.
Bins & Crates continued to achieve good volume growth in agricultural crates and jumbo bins, which was more than offset by lower beverage crate and wheelie bin sales, the latter due to weak municipal demand.
FMCG Wadeville's revenue fell by 21,8%, primarily reflecting the portfolio transition following the exit of two large contracts in June 2024. There was aso a slower-than-anticipated rollout of new customer projects and a vinegar shortage in the first half, which disrupted customers' mayonnaise production.
A much-improved outcome from the business was anticipated in 2026.
The rest of the FMCG business increased sales volumes and operating profit, driven by customer projects and growing export activity by some customers into other African markets and the Middle East. This resulted in a 39,2% increase in underlying operating profit. The businesses continue to find new opportunities, and the outlook remains positive.
BUSINESS REPORT