SALIENT FEATURES
- Net asset value per share increased 5% to R35.85 from June 2024
- Satisfactory progress on strategic projects and portfolio optimisation
- Revenue up 3% to R6.4 billion
- EBITDA of R625 million
- Underlying operating profit of R315 million
- Headline earnings per share of 93 cents
- Interim dividend per share of 30 cents
Johannesburg, 4 August 2025 – Mpact, the largest paper and plastics packaging business and recycler in southern Africa, reported their results for the six months ended 30 June 2025, today. The Group continued to face a persistently challenging trading environment for the period, resulting in trading and profitability ending below expectations. The general economy remained subdued, despite lower interest rates and inflation, while uncertainty across local and global markets negatively impacted business confidence.
Despite the economic downturn, the Group benefited from its strategic alignment with growth sectors and increased competitiveness. Good volume growth was realised in containerboard and fruit packaging. These gains, however, were offset by declines in industrial sales volumes due to portfolio optimisation and depressed consumer demand.
Bruce Strong, Mpact Chief Executive Officer, said: “We continue to make good progress on our strategic capital projects, which focus on growth sectors and investments in innovative, higher-margin, and sustainable products. We remain confident in our value-enhancing strategy and prospects, notwithstanding the recent headwinds. Our solar PV generated power amounting to 16 MWp, resulted in a saving of over R20 million in electricity costs during the first half of the year.
The R1.3 billion upgrade project at the Mkhondo mill has reached a significant milestone, with construction and commissioning of the sodium lignosulphonate (SLS) plant complete, and the pulp mill upgrade in its final stage of construction. We are encouraged by the progress and remain on track to complete the pulp mill commissioning during the third quarter of this year. Thereafter, we will require several months to optimise both plants to reach design specifications and conduct SLS customer trials. This marks a major step forward in enhancing our operational capabilities and product portfolio to support future growth.”
The global cyclical downturn in the paper industry led to lower margins in our Paper business, as selling prices decreased more than input costs, particularly due to higher local recovered paper prices. We anticipate that this will remain the case for the remainder of the year. Despite this challenging environment, we were able to grow local and export containerboard volumes due to the competitive position of our Felixton paper mill, albeit at lower margins.
Demand from the fruit sector was up on the first half of last year (prior period), with good growth in plastic crates and citrus cartons partially offset by lower sales volumes in banana and avocado cartons. We anticipate continued growth in the agricultural sector in the second half of 2025. The industrial market remained weak, impacting our Springs mill, the Paper Converting business and beverage crates. As anticipated, FMCG Wadeville’s volume declined significantly following the expiry of two supply contracts with a major customer in June 2024.
Group revenue from continuing operations for the period ended 30 June 2025 increased by 3.2% compared to the prior period to R6.370 billion (June 2024: R6.173 billion), primarily driven by increased containerboard sales volumes in the Paper business.
Revenue growth achieved in the Paper business was offset by higher variable costs, particularly increased recovered paper prices and energy costs, as well as lower sales volumes in the Plastics business, leading to a 2.8% reduction in the Group’s gross profit.
Underlying earnings before interest, depreciation and amortisation (EBITDA) decreased by 14.5% to R625 million (June 2024: R731 million) and operating profit by 25.5% to R315 million (June 2024: R423 million). Fixed costs were well managed, increasing by 1.9% on the prior period.
Operational overview
Paper business
Revenue for the Paper business increased by 6.9% to R5.4 billion (June 2024: R5.1 billion), due to a 5.9% increase in sales volumes and a 1.0% increase in the average selling price. Volumes increased due to improved containerboard sales, somewhat offset by lower cartonboard and corrugated sales volumes.
Gross profit was in line with the prior period, with the benefits of increased sales and production volumes offset by higher recovered paper prices, energy costs and variable selling expenses associated with a higher proportion of containerboard exports. The gross profit margin declined by 2.7 percentage points.
Underlying operating profit declined to R346 million (June 2024: R414 million) due to a 3.7% increase in fixed costs related primarily to extensive commercial downtime in the prior period.
The Recycling business successfully increased collection volumes during the period to ensure a consistent supply to our paper mills and external customers. Recovered paper prices were up significantly compared to the prior period due to continued export demand, especially from India.
Paper Manufacturing increased containerboard sales volumes by 20.3% following the successful interventions at the end of 2024 to increase exports and displace imports in the local market, utilising the improved competitiveness of the Felixton mill following the recent upgrade. This approach mitigated the impact of cheap recycled containerboard imports, and no commercial downtime was incurred at Felixton or Mkhondo during the current period. Performance at the Mkhondo mill was impacted by construction related to the upgrade project.
Cartonboard sales volumes from the Springs paper mill declined by 9.5% due to subdued local market conditions and import competition. Springs mill took 15 days of commercial downtime in the current period to manage stock levels. In addition, the mill incurred 18 days of downtime due to external utility supply interruptions.
Paper Converting’s revenue was down 1.3% compared to the prior period, with lower sales volumes partially offset by an increase in the average selling price. Corrugated sales to the fruit sector were flat and industrial sales were lower due to weak demand.
Plastics business
Revenue in the Plastics business decreased by 14.7% to R936 million (June 2024: R1,097 million) primarily due to lower sales volumes at FMCG Wadeville, as anticipated, as well as lower beverage crate sales in Bins & Crates. This was partially offset by a favourable product mix resulting from the exit of the abovementioned contracts, as well as good revenue growth in the rest of the FMCG business.
Underlying operating profit was R7 million (June 2024: R64 million) due to a 13.9% reduction in gross profit arising from lower sales volumes. Controllable costs were well managed. The gross profit margin was similar to the prior period, and fixed costs decreased by 4.5%. Notwithstanding the decline in profitability in the first half of the year, we expect an improved full-year result from the Plastics business compared to the prior year. Historically, profitability in the Plastics business, particularly Bins & Crates, was heavily weighted towards the second half of the year, and we expect 2025 to be similar.
Bins & Crates experienced good growth in jumbo bins and agricultural crates, which was more than offset by lower beverage crate sales.
Although the decline in sales volumes at FMCG Wadeville was expected, the new business secured to offset some of the volume losses did not meet expectations due to the slower-than-expected rollout of new customer projects. Additionally, several existing customers were affected by a vinegar shortage, which disrupted mayonnaise production. Despite these challenges, we still anticipate a much-improved second half in the FMCG Wadeville business.
The rest of the FMCG business increased sales volumes and operating profits in the current period, driven in part by robust demand in our customers’ personal care export markets. Both operations benefit from a good customer base, and the outlook remains positive.
Outlook
A significant uplift in the South African economy seems unlikely in the near term. Coupled with a challenging global backdrop, we expect trading conditions to remain difficult in the second half of the year, with a corresponding impact on profitability. Despite these challenges, we will continue to focus on realising benefits from our portfolio optimisation and other strategic projects.
Based on current projections, no commercial downtime is anticipated at the containerboard mills. However, continued pressure on selling prices is expected to offset the positive operating leverage benefits. We also anticipate cartonboard prices and sales volumes to remain under pressure due to weak local demand and competitive imports. Unplanned utility disruptions continue to be an issue, particularly at the Springs paper mill and some other Ekurhuleni-based operations.
The Mkhondo mill upgrade project is on track for the construction and commissioning of the pulp mill to be completed during the third quarter, following approximately four weeks of downtime. Thereafter, we will require several months to optimise both the new SLS plant and upgraded pulp mill to reach design specifications and conduct SLS customer trials. This marks a significant step forward in enhancing our operational capabilities and product portfolio to support future growth. The contribution from this project to the Group’s overall profitability will be limited for the 2025 financial year.
We continue to see good growth from the agricultural sector in Paper Converting and Bins & Crates, which has been a strategic focus area for the Group. According to the Citrus Growers Association’s latest estimates, citrus exports for 2025 are expected to exceed those of the prior year, and long-term, structural growth is still anticipated from this sector.
We expect an improved full-year result from the Plastics business compared to the prior year. Both FMCG Wadeville and Bins & Crates have restructured their cost base, which, along with higher sales volumes, should improve margins.
Strong concluded: “We remain confident in our value-enhancing strategy and committed to executing it effectively. Mpact’s strategy focuses on growth sectors and investments in innovative, higher-margin, and sustainable products. These sectors include fruit exports, returnable transit packaging, convenience shopping and recycling, some of which are somewhat insulated from the South African consumer spending patterns. Our strategy aims to consistently yield tangible benefits for the business and improved returns for our shareholders.”
| Issued on behalf of: | Mpact Limited |
| Bruce Strong, Chief Executive Officer Hannes Snyman, Chief Financial Officer | |
| Tel: | +2711 994-5508 |
| Compiled and released by: | Keyter Rech Investor Solutions |
| Contact: | Marlize Keyter |
| Tel: | 083 701 2021 |
| Email: | mkeyter@kris.co.za |
| Issue date: | 4 August 2025 |
| JSE code: | MPT |
| Website: | www.mpact.co.za |