Mpact firmer de­spite drop in earn­ings per share

The Star Early Edition - - COMPANIES - Sandile Mchunu

MPACT moved to pos­i­tive ter­ri­tory on the JSE on Tues­day, de­spite the paper-and-plas­tics com­pany re­port­ing a de­cline in un­der­ly­ing earn­ings per share for the six months to the end of June.

The share slid 4.19 per­cent af­ter the re­sults were an­nounced, but it closed 0.44 per­cent up at R27.50.

The group, which was spun out of pack­ag­ing and paper group Mondi, has spent R3 bil­lion over the past five years on up­grad­ing mills, com­mis­sion­ing bot­tle-re­cy­cling plants, and ac­quir­ing a trader in re­cy­clable ma­te­rial to en­hance its com­pet­i­tive po­si­tion.

Mpact said on Tues­day it ex­pected to com­plete the up­grade of its R765-mil­lion Felix­ton paper mill dur­ing the sec­ond half of this year. The un­com­pleted up­grade con­trib­uted R24m to lost prof­its dur­ing the re­port­ing pe­riod.

Sales in South Africa ac­counted for 89 per­cent of to­tal rev­enue dur­ing the pe­riod, while the bal­ance was pre­dom­i­nantly to cus­tomers in the rest of Africa.

Prof­itabil­ity was neg­a­tively af­fected by lower sales vol­umes in its paper and plas­tics busi­nesses and the higher cost of re­cov­ered paper.

Mpact re­ported a 63.98-per­cent de­cline in un­der­ly­ing earn­ings per share to 34.3 cents, down from 95.2c, while un­der­ly­ing op­er­at­ing profit was down 47.52 per­cent to R169m, com­pared with R322m in the prior pe­riod.

Group rev­enue in­creased 3.1 per­cent to R4.8bn.

The group said rev­enue in its paper busi­ness grew 7.4 per­cent to R3.7bn.

Rev­enue in the plas­tics busi­ness de­creased 8.5 per­cent to R1.2bn be­cause of lower sales vol­umes and lower av­er­age sell­ing prices.

To­tal ex­ter­nal sales vol­umes de­clined 1.3 per­cent.

The group de­clared an in­terim gross div­i­dend of 15c a share, down from 30c.

PHOTO: AN­TOINE DE RAS

Mpact’s paper-re­cy­cling plant in Springs. The group says rev­enue in its paper busi­ness grew 7.4 per­cent to R3.7 bil­lion.

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