https://www.engineeringnews.co.za
Business|Environment|Financial|Innovation|Packaging|Paper|Sustainable|Packaging|Operations
Business|Environment|Financial|Innovation|Packaging|Paper|Sustainable|Packaging|Operations
business|environment|financial|innovation|packaging-company|paper|sustainable|packaging|operations

Tough trading conditions reported by manufacturer

27th March 2020

     

Font size: - +

Paper and plastic packaging manufacturer Mpact says it experienced tough trading conditions in the year that ended on December 31, 2019.

“Trading over the past year across most of our businesses has been very challenging from a demand perspective.

“The South African economy remained weak and business and consumer confidence have been hit hard by load-shedding and uncertainty in a number of areas,” says Mpact CEO Bruce Strong.

He adds that such factors had a marked effect on its customers and particularly its consumer-facing businesses. Sales volumes were under pressure across most sectors.

Notwithstanding the trading environment, underlying earnings before interest, taxes, depreciation and amortisation from continuing operations of R1.276-billion was in line with the prior year, with underlying operating profit of R724-million declining 3.7%.

Recent capital investments such as the Felixton paper mill upgrade and the new corrugator in Port Elizabeth contributed positively to the results.

Further, good progress was made in developing innovative packaging alternatives for its customers, some of which were recognised with a number of awards.

Strong explains that, during the year, Mpact’s paper punnets and paper bags for grapes, tomatoes and other fruit gained prominence and market acceptance, and can now be seen on retail shelves locally and abroad.

“Our investment into shopper bags has been positive, with two additional paper bag formers installed in 2019.

“The shopper bags are made from 100% recycled paper produced at Mpact’s Felixton mill, providing a strong, sustainable substitute for plastic shopper bags,” he says.

One of the most difficult decisions the company took was to shut the polyethylene terephthalate (PET) recycling plant, Mpact Polymers, because it was unable to obtain a sustainable price for its recycled PET.

Consequently, Mpact Polymers has been deconsolidated from the group, and its profit and loss statement for the reporting period is disclosed separately as a discontinued operation, Strong states.

Group revenue from continuing operations of R11.1-billion was 5.1% higher than the prior year’s R10.5-billion, with higher average selling prices offsetting lower sales volumes.

He explains that, from January 1, 2019, Mpact adopted the new accounting lease standard, International Financial Reporting Standard 16, which decreased profit before tax by R33-million and underlying earnings a share by 14c.

Underlying operating profit from continuing operations decreased by 3.7% to R724-million, compared with R752-million in December 2018 with return on capital employed at 11.8%, which was a decrease from 11.9% in December 2018.

“Through our focus on innovation and the introduction of new product offerings, we will continue to work with our customers to develop new markets,” concludes Strong.

Edited by Zandile Mavuso
Creamer Media Senior Deputy Editor: Features

Comments

Showroom

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 
SMS group
SMS group

At SMS group, we have made it our mission to create a carbon-neutral and sustainable metals industry.

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.102 0.16s - 147pq - 2rq
Subscribe Now