Media releases

Strong performance on the back of robust demand, product innovation and resolute strategy

07 March 2022


  • Strong financial performance and good progress on Group strategy implementation
  • Revenue up 12.6% to R11.5 billion (2020: R10.3 billion)
  • Underlying operating profit (EBIT) improved by 56.2% to R948 million (2020: R607 million)
  • Underlying earnings per share (EPS) up 93.2% to 360 cents (2020: 186 cents)
  • Share buy-back returned R257 million to shareholders (2020: returned R88 million)
  • Final dividend declared of 50 cents per share (cps), returning a further R74 million to shareholders (2020: nil cents per share)
  • Return on capital employed (ROCE) increased to 17.8% (2020: 11.4%)
  • Mpact Operations retained its Level 1 B-BBEE rating

Johannesburg, 7 March 2022 – Mpact, the largest paper and plastics packaging business and recycler in southern Africa, reported their final results for the year ended 31 December 2021 today.

Bruce Strong, Chief Executive Officer of Mpact, commented: “Mpact delivered a pleasing performance in 2021, successfully navigating the challenging business environment. Group revenue from continuing operations increased by 13% when compared to the prior year to R11.5 billion. Underlying EBIT from continuing operations increased by 56% to R948 million and underlying earnings per share increased by 93% to 360 cents. Return on capital employed increased to 17.8%.”

Strong added: “Mpact has once again shown tremendous resilience, firmly anchored in our purpose of providing our customers with innovative sustainable packaging, giving effect to the circular economy through our integrated business model and making a difference in the communities where we operate.

Good progress was made in implementing the Group strategy through a combination of investments and portfolio optimisation. Several projects were successfully completed during the year and the Board approved over R700 million in new capital investments to support growth and innovation, improve margins, and ensure the resilience and sustainability of our operations. These projects include new facilities, new technology, plant, equipment and solar power to improve efficiencies and expand our capacity to meet growing customer demand.“

Innovation is a cornerstone of Mpact’s business and our investments in research and development allow us to identify new ways to meet customers’ packaging needs, improve their offerings and contribute to the circular economy. Our efforts in this regard were once again recognised through a number of awards. Mpact received seven product design awards at the 2021 IPSA Gold Pack Awards, including the prestigious Gold Pack trophy recognising PETzorb as the overall winner. A further two awards were also received from the South African Plastics Recycling Organisation.

During 2021, unprecedented supply chain constraints globally and across all sectors affected the availability and cost of most raw materials, with recovered paper, plastic polymers, electricity and several process chemicals escalating well above inflation. The supply chain challenges led to increased demand from customers for locally produced products, from which Mpact benefited. Thanks to the foresight and ingenuity of Mpact’s management, there were no significant interruptions to operations, although customer demand exceeded capacity in certain businesses.

Decisive action was taken by management and staff of operations affected by the regional unrest in July 2021. There were no injuries to employees nor any damages to Mpact’s assets attributable to the unrest. All of the KwaZulu-Natal operations were closed for up to 8 days which resulted in lost gross profit of approximately R20 million due to reduced production and sales.

Group revenue for the year ended 31 December 2021 increased by 12.6% to R11.5 billion (2020: R10.3 billion) as a result of an 8.8% increase in sales volumes and a 3.8% increase in the average price. Gross profit increased by 13.5% compared to the prior year with the gross profit margin increasing to 36.9%.

Underlying EBIT increased by 56.2% to R948 million (2020: R607 million) due to higher gross profit, well contained controllable fixed costs and a lower depreciation charge.

Underlying earnings per share increased by 93.2% to 359.6 cents (2020: 186.1 cents) due to strong earnings growth and the reduced number of shares in issue following the share buy-back in 2021. ROCE improved to 17.8% (2020: 11.4%).

Paper business

Segment revenue increased by 12.2% compared to the prior year to R9.7 billion. External sales volumes increased by 8.7% and the average price increased 3.5%.

The good performance in the first half continued in the second half with strong local containerboard and cartonboard demand. In addition, the paper converting division benefited from the recovery in the industrial and quick service restaurant sectors as well as the growth from new products sales.

Underlying EBIT for the Paper business increased by 51.5% to R875 million (2020: R578 million) due to a favourable product mix with low margin rolled pulp not being produced or sold in 2021 (2020 rolled pulp sales: 20 806 tons) and improved operational efficiencies. Higher raw material costs during the year were partially recovered through paper selling price increases in the last quarter of 2021 and we expect to realise the full margin benefit in 2022.

A second interim insurance payment of R25 million relating to the Springs Mill electricity supply interruption in 2020 was approved by insurers and included in the results as sundry income. It is anticipated that a final settlement amount of approximately R45 million will be included in the 2022 results.

Plastics business

Revenue in the Plastics business was up 14.2% to R1.9 billion (2020: R1.6 billion) due to good demand in Bins and Crates and a recovery of volumes in Preforms and Closures, offset by lower demand in FMCG. Overall, volumes increased by 9.5% with price and mix up 4.7%.

Underlying EBIT increased by 33.7% to R200 million due to good growth across most sectors and a lower depreciation charge, partially offset by delays in increasing selling prices to recover higher polymer costs. The underlying operating margin improved to 10.7% (2020: 9.2%).

Headline earnings per share (HEPS) increased 89% to 343.2 cents (2020: 181.6 cents) while underlying basic earnings per share (EPS) improved 93.2% to 359.6 cents (2020: 186.1 cents).

Notwithstanding the significant return of cash to shareholders during the period through the successful share buy-back, the Board has resolved to declare a final gross cash dividend of 50 cents per ordinary share for the financial year ended 31 December 2021 (2020: nil per ordinary share).

Following a strategic review, Mpact’s Board has decided to sell its plastic trays and films business, Versapak. The reason for this decision is that Versapak’s products are not fully aligned with Mpact’s strategy. Mpact Versapak is disclosed as a “discontinued operation”. The decision to sell Versapak does not affect any other Mpact Plastics businesses being FMCG, Plastic Containers and Preforms and Closures. 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 ended 31 December 2021, Versapak reported revenue of R920 million (2020: R839 million), and net earnings of R2 million (2020: R15 million), which equates to basic EPS of 1.5 cents (2020: 9.0 cents). Versapak’s net asset value as at 31 December 2021 was R301 million (2020: R217 million).

Mpact is expected to continue to benefit from the strong global containerboard and cartonboard market as well as increased demand for locally-produced products. In addition, the annual paper selling price increase realised at the end of 2021 will assist the Group in recovering increases in raw material costs. However, the ongoing effects of Covid-19 and the general tightening on monetary policy could negatively affect consumer spending while the pressure on input costs is likely to remain.

The upward inflationary pressure arising from global supply chain disruptions, exacerbated by the current Ukrainian crisis, are expected to continue for the foreseeable future. The Group has implemented measures to mitigate against the effects and exploit any opportunities that may arise from the disruptions. Nevertheless, the impact on the availability and cost of raw materials remains uncertain. The proposed sharp increase in electricity tariffs by Eskom, the ongoing instability of the national grid and the escalating price of fuel remain concerns in the coming year.

Strong concluded: “Despite these immediate challenges, the Group is working on the successful implementation of several approved projects and other growth opportunities totalling over R700 million to support customer focused growth, innovation and sustainability; and to build on the Group’s integrated business model, which is uniquely focused on closing the loop in paper and plastic packaging, contributing to the circular economy, and benefiting society.”


Issued on behalf of: Mpact Limited
Contact: Bruce Strong, Chief Executive Officer
Tel:+2711 994-5508

Compiled and released by: Keyter Rech Investor Solutions
Contact: Marlize Keyter
Tel: 083 701 2021

Issue date: 7 March 2022
JSE code: MPT