JSE-listed Mpact expects to report basic earnings a share (EPS) for continuing operations of between 340c and 360c a share for the year ended December 31.

That represents an increase of between 89.3% and 100.4% when compared with the prior year.

It further expects to report an increase of between 81.7% and 92.7% in headline earnings a share and an increase of between 85.4% and 96.1% in underlying earnings a share.

In a trading statement, Mpact says it benefitted from robust demand across most businesses, resulting in revenue from continuing operations increasing by about 13% year-on-year to R11.5-billion.

The paper business benefitted from higher domestic demand, a more favourable product mix and higher average selling prices, which were partly offset by significant increases in costs, most notably of pulp and recovered paper, it notes.

The plastics business showed good growth across most sectors and improved profitability despite delays in increasing selling prices to recover higher polymer costs.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) are expected to increase by between 22% and 30% on the R1.14-billion Ebitda posted for 2020, while underlying earnings before interest and taxes (Ebit) are expected to have increased by between 52% and 59% from the R607-million reported for 2020.

Net finance costs are expected to be about R140-million owing to lower average net debt and interest rates.

Net debt of R1.76-billion increased mainly owing to a cash outflow in respect of the share buy-back undertaken in January 2021, as well as increased working capital.

Following a strategic review, Mpact’s board has decided to sell its plastic trays and films business, Mpact Versapak, as a going concern. Versapak currently forms part of the plastics division of Mpact.

The decision to sell Versapak does not affect any other Mpact plastics businesses.

Versapak is a producer of plastic trays and film with a well-established brand, blue-chip customers and a solid asset base, Mpact says, noting that the reason for the decision is that Versapak’s products are not fully aligned with its strategy.

The company is currently in the early stages of engagement with potential buyers for the business. It is anticipated that the sale could take several months to complete.

For the year under review, Versapak reported revenue of R920-million and net earnings of R2-million. Mpact will release its results for the period on or about March 7.