Higher sales prices boost Mpact’s revenue

PAPER and plastics manufacturer Mpact benefited from a volatile rand and higher-thanaverage pricing as well as an uptick in plastics sales volumes in the first half of the year.

The largest local producer of packaging products such as corrugated cardboard, recycled carton and container boards said it was able to drive growth despite difficult trading conditions. Mpact said subdued economic and consumer spending growth contributed to the tough trading conditions.

Mpact reported a revenue rise of 9.7 percent to R3.5 billion for the six months to June from a year earlier. The increase in revenue was attributed to higher selling prices.

Underlying profit increased by 6.1 percent to R236 million in the period. Underlying earnings a share were up 20.9 percent to 77c.

Plastics revenue increased by 17.7 percent to R969m due to an increase in volume sales.

However, the underlying profit margin decreased to 6.7 percent from 6.9 percent in the previous year due to the higher price of raw materials.

Net debt was at R1.48bn, an increase of R100m from the previous comparable period.

Mpact said the increase in net debt was due primarily to working capital outflows at the end of June last year.

Mpact chief executive Bruce Strong said the results were “a mixed bag” and that packaging for fruit exports was robust in the first six months, helping to drive up revenue.

Mpact split from international paper company Mondi in July 2011.

Strong said the company had a long heritage with Mondi.

“It was decided that it was best if we separated, we focus more on the aspects of the business that Mondi did not,” Strong said.

Last week Mondi reported a 60 percent jump in earnings for the six months to June, boosted by thriving sales in Europe.

Smaller rival plastic packaging company Astrapak suffered a R56.3m loss after a fire at one of its plastic operations resulting in its headline earnings declining by more than 67 percent for the year to February.

Africa’s largest diversified packaging company, Nampak, recently expanded its factory in Luanda and introduced a second line of beverage cans.

Strong said Mpact was continuing to “look for growth opportunities”.

“There is no doubt the east and west African market is appealing, particularly the west because of its higher populations,” he added.

The company declared an interim gross cash dividend of 22c a share, an increase of 10 percent from last year.

Mpact shares were down 3.58 percent to R26.90 yesterday. The JSE’s general industrials index rose 1.01 percent.