The company, which released their interim results on Wednesday, declared an interim gross cash dividend of 22 cents per share was up 10 per cent, with underlying earnings per share up 20.9 per cent to 77.0 cents.
“Operating conditions remain characterised by subdued GDP and consumer spending growth that in turn is driving an intensely competitive trading environment,” Mpact CEO Bruce Strong said in a press statement.
The company’s underlying operating profit was up 6.1 per cent to R236 million. Their profit margin however decreased to 6.7 per cent from 6.9 per cent in the same period last year due to an under-recovery of raw material price increases in certain products.
Strong added that the company’s key measure of return on capital employed nonetheless improved to 15.5 per cent from 14.1 per cent in the same period in 2012.
Mpact’s manufactured products were buoyed by the weaker rand and also helped supported growth in the company’s packaging for fruit export. The growth support was however offset by the increase in the raw material prices of plastic polymers, pulp and chemicals.
Revenue for Mpact’s paper business for the six months rose by 6.9 per cent to 2.5 million rand, with underlying profit having increased by 8.9 per cent to 251.3 million rand. The plastics business increased by 17.7 per cent to 969 million rand but had their underlying operating profit decrease by 7.6% to 34.3 million rand due to an under-recovery of raw material cost increases during the period.
“While we expect operating conditions to remain the same for the second half, our focus will be on ensuring good profitability across our product range and return on capital employed to enable continued investment in our competitive manufacturing base,” said Strong.
Net debt for the period ended 30 June 2013 was 1.4 billion rand, an increase of 100 million rand from 30 June 2012.
Mpact is one of the largest paper and plastic packaging businesses in Southern Africa with 31 operating sites of which 24 are based in South Africa, Namibia, Mozambique and Zimbabwe.