Mpact’s headline earnings per share for continuing operations are expected to increase resiliently by between 30.3% and 37.3% for the six months to June 30, 2023 after it focused on higher margin business.
Mpact is a leading paper and plastics packaging manufacturer in southern Africa and recycler of recovered paper and plastic.
Basic earnings per share (EPS) are expected to be between 185 and 195 cents, an increase of between 33.2% and 40.4% over a year before, the group said in a trading statement yesterday.
The earnings increase was mainly due to an improvement in the plastics business’s profitability as a result of the recent investments in bins and crates manufacture, and consolidation of the preforms and closures operations.
Selling prices in the paper business were higher and there was a recovery from the impact of the April 2022 KwaZulu-Natal floods.
“Mpact continues to benefit from its strategic investment projects, the expansion into new higher-margin product areas, and increased operational resilience due to investments in its own alternative power and water supplies,” the group said.
Revenue for the six months is expected to increase by about 9% compared to the prior period, with higher average selling prices partially offset by lower sales volumes.
Net debt increased by R313 million to R2.64 billion (December 2022: R2.33bn), after investing R843m in capital projects.
Mpact’s board plans to sell its Plastics Trays & Films business, Versapak, as a going concern. Versapak currently forms part of the Plastics Division of Mpact Operations.
Mpact’s results, expected to be released on August 4, includes separate disclosures for discontinued operations and assets and liabilities held-for-sale.
The sale of Versapak was not concluded by June 30, but discussions are under way with potential buyers, and the group anticipates the sale may take several months to complete, the statement said.
For the six-month period, Versapak’s revenue amounted to R545m (June 2022: R510m), and net earnings came to R34m (June 2022: R28m), which equates to basic earnings per share of 23.4 cents (June 2022: 19.3 cents).
In 2022 it was decided to exclude Versapak’s trade receivables, cash balances and trade payables from the assets and liabilities held for sale to reduce the complexity of a transaction.
This resulted in Versapak’s net asset held-for-sale decreasing to R173m from R337m at June 30, 2022.
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