Mpact’s shares jump 4% as market cheers rise in profit

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The company expects further improvement in the paper business as projects are optimised and fruit volumes improve in the Western Cape following the drought

Shares in Mpact were 4% higher at R24.45 on Wednesday morning after the packaging group said underlying operating profit surged 47% to R672m in the year to December, thanks in part to the upgrade of one of its mills.

“The group’s financial results reflect a strong trading performance in the second half of the year in the paper business, which benefited from the Felixton mill upgrade, lower recovered paper prices and increased corrugated packaging sales,” Mpact said.Mpact said total revenues were up 4.9% to R10.6bn, helping it to hike its total gross dividend for the year by 27% to 70c a share.

The group also aimed to capitalise on opportunities arising from the shift towards recycled products, it said. “Recent developments in SA suggest the government is serious about fiscal discipline, tackling corruption and restoring the performance of state-owned enterprises, which gives some hope for our future growth prospects.Profit margins would be dented by SA’s new carbon tax and higher-than-inflation increases in the costs of electricity, water and other administered services.

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