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Mpact, the largest paper and plastics packaging and recycling business in Southern Africa, has reported a fall in profit amid “very tough" trading conditions.
The company says there is still no indication of any meaningful improvement in the South African economy, which is aggravated by debilitating power outages. There is also global oversupply of containerboard and cartonboard.
Local and export demand was weaker, and its paper mills took commercial downtime equal to 10% of their annual capacity. During the year, its polyethylene terephthalate (PET) recycling operation, Mpact Polymers, was closed.
While its revenue increased by 5% to R11.1 billion in the year to end-December, its headline earnings per share fell from 235.3 cents to 185.8 cents.
Benefits from recent capital investments such as the Felixton paper mill upgrade and the new corrugator in Port Elizabeth partially offset the effects of the challenging trading environment.
Net debt increased to R2.3 billion, from R1.8 billion in 2018.
Mpact says that there has been no discernible impact on the group's sales or supply chains from the current coronavirus outbreak to date.
A final gross cash dividend of 42c was declared. Its share price gained half a percent by Wednesday afternoon to R12.82, but remains more than 50% below last year's high point of R29.
