Mpact’s profit surpasses pre-pandemic levels

Mpact, a leading packaging company, has recently reported impressive interim results. The company's underlying profit has surged by a remarkable 165 per cent, surpassing pre-pandemic levels. In a bid to reward shareholders, Mpact has returned R257 million through a share buy-back program. This initiative, which has seen the repurchase of 15% of the company's issued shares, has resulted in a significant value uplift for investors. As a consequence of these robust financial performances, Mpact's board has decided not to declare a dividend at this time, preferring instead to focus on enhancing shareholder value through strategic investment and share repurchases. Bruce Strong, the CEO of Mpact, shed light on the rationale behind this decision in a recent interview with CNBC Africa. During the discussion, Strong highlighted the operational environment Mpact navigated during the reporting period. Despite the challenges posed by the COVID-19 pandemic, supply chain disruptions, and escalating input costs, Mpact thrived due to increased demand for local products. The company's strategic focus on sectors experiencing growth, such as fruit packaging, has enabled it to capitalize on emerging market trends. Strong emphasized Mpact's resilience in the face of rising commodity prices, citing the company's proactive efforts to mitigate cost pressures and sustain operational efficiency. One of the key factors influencing Mpact's performance has been the shift from imports to locally produced goods, driven by global supply chain constraints. Strong acknowledged the logistical challenges posed by supply chain disruptions, such as container shortages and force majeure declarations by raw material suppliers. These disruptions have led to longer lead times, increased costs, and operational complexities for manufacturers like Mpact. However, Strong expressed confidence in Mpact's ability to navigate these challenges and leverage local production to meet customer demand effectively. Moreover, Strong addressed the impact of currency fluctuations on Mpact's competitiveness. While a weaker rand could potentially benefit local manufacturers by reducing competition from imported goods, Strong underscored the importance of currency stability for business sustainability. He emphasized the need for a stable exchange rate to mitigate volatility and ensure a conducive operating environment for manufacturers. In terms of capacity and margins, Mpact has experienced robust demand, with several business units operating at full capacity. This high level of capacity utilization bodes well for future margins and profitability. Despite margin pressures stemming from input cost inflation, Mpact aims to improve its margins in the upcoming periods through strategic initiatives and operational efficiencies. Additionally, Strong addressed the temporary disruption caused by the recent civil unrest in South Africa, noting that Mpact had temporarily closed operations to ensure the safety of its workforce and assets. However, the company has since resumed full operations and is optimistic about recovering any lost sales by the end of the year. Overall, Mpact's stellar financial performance, driven by strategic investments, operational resilience, and market dynamics, positions the company for continued growth and value creation. By prioritizing shareholder value through share buy-backs and strategic investments, Mpact is poised to deliver sustainable returns to its investors and solidify its position as a market leader in the packaging industry.