A statement from the company said: “The results for the period reflect an improved performance in plastics following the successful restructure of the FMCG business during 2014, good volume growth and a better operating profit margin, while the paper business once again delivered steady growth underpinned by increased sales to the fruit sector.” Mpact said a reduction in the effective tax rate for the period, from 30 percent to 21.1 percent, was due mainly to the recognition of deferred tax on previously unrecognised tax losses.
The group, one of the leading paper and plastics packaging businesses in southern Africa with 33 operating sites in South Africa, Namibia, Mozambique, Botswana and Zimbabwe, also pointed to an improvement in its Broad-Based Black Economic Empowerment rating during the period, from Level 5 to Level 3, after the successful implementation of an empowerment transaction, announced in April.
Group revenue was 10.8 percent higher in the period under review, at R4.4 billion, from R4 billion in the corresponding period last time. The company, which has a leading market position in southern Africa in recovered paper collection, corrugated packaging, recycled-based cartonboard and containerboard, polyethylene-terephthalate (PET) preforms, styrene trays and plastic jumbo bins, said revenue growth was attributable mainly to volume growth, a favourable sales mix and higher selling prices.
Underlying operating profit increased by 26.8 percent to R342 million, from R270 million, and the operating profit margin increased to 7.8 percent from 6.8 percent. Profit from continuing operations came in at R228 million, up from R149.5 million.
A dividend of 30 cents per share was declared, a 15.4 percent improvement on 26 cents last time. The company said the R350 million PET recycling plant and the first phase of the R765 million upgrade of the Felixton mill had been commissioned on time and within budget during the period.
Looking ahead, Mpact said subdued economic conditions in South Africa would make it difficult to maintain similar levels of volume growth in the second half, and added that other concerns were the level of inflation in input costs such as raw materials, labour, electricity and administered services.