Mpact, the largest paper and plastics packaging business and recycler in Africa, reported their interim results for the six months ended 30 June 2022.
Bruce Strong, Chief Executive Officer of Mpact, commented: “We are pleased with our improved results for the six-months ended 30 June 2022. We achieved these results on the back of strong local demand for both containerboard and cartonboard as well as good growth in new product sales. Higher selling prices implemented at the end of 2021 helped to mitigate sharply escalating input costs.
Trading was mixed across the rest of the business, with good sales volume growth in the QSR, beverage and home delivery sectors, partly offset by declines in other FMCG sectors as well as fruit packaging. Fruit packaging has been impacted by the uncertainty arising from the sanctions related to the Russia-Ukraine conflict, as fruit producers have delayed decisions on harvesting and packaging of some products until they are able to establish which markets to service and how. Their operations were impacted by a number of factors including port constraints in South Africa and adverse weather in some regions.”
Macroeconomic uncertainties and persistent global supply chain constraints continued to impact business and the cost and availability of most raw materials and new capital equipment. Where possible, we increased raw material inventory to mitigate long lead times and periods of uncertainty.
Despite these external challenges, there has been meaningful progress on the implementation of our strategy. This includes a number of capital investments for future growth. Delays in the manufacturing and shipping of capital equipment for a number of projects, ordered mainly from Europe and Asia, have negatively impacted some completion dates. We have however, contained project costs to within the approved budgets, with a few exceptions related to exchange rate movements and the abovementioned delays.
In addition to these global challenges, we have successfully navigated the lingering effects of last year’s unrest in KwaZulu-Natal (KZN), the recent floods in KZN, drought in the Eastern Cape, unprecedented load shedding and other municipal service interruptions countrywide.
Group revenue for the six months increased by 5.2% to R5.7 billion compared to the prior period with sales volumes decreasing by 1%. The Baywhite distribution agreement with Mondi terminated at the end of December 2021, with only inventory clearing sales of Baywhite taking place during the period. Group revenue excluding Baywhite increased by 13.0% and sale volumes by 6.3%.
Underlying operating profit (EBIT) increased by 21.5% to R387.1 million (June 2021: R318.7 million) mainly attributable to strong domestic demand in the Paper business, partly offset by lower sales volumes in the Plastics business, and higher input costs
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