Mpact firmer despite drop in earnings per share
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.