Stronger plastics drive star Mpact results
by Mark Allix,
2016-03-03 06:07:56.0
MPACT says its stellar results for the year to December reflect a strong improvement in the group’s plastics business and a lower effective tax rate.
The packaging maker says the boost in plastics is from good volume growth, cost containment, and the restructuring of the fast-moving consumer goods business in 2014.
CEO Bruce Strong says consistently good results have been attained by continuing to invest in group businesses.
New plant and equipment had saved on electricity usage — to two-thirds of such costs — while significantly increasing production volumes.
"This all translated to bottom line growth," he said on Wednesday.
Revenue of R9.5bn was 10.8% higher than in the previous year, attributable to higher average selling prices, organic volume growth and acquisitions. Underlying operating profit increased 21% to R909m, with operating profit margin increasing to 9.5% from 8.7% in the previous year.
Underlying earnings per share increased 36.3% to 366.9c from 269.2c in 2014.
Mpact said two major capital projects had progressed well during the year. The first phase of the R765m Felixton paper mill upgrade in KwaZulu-Natal was commissioned on time and within budget, with the mill’s subsequent performance reflecting the expected benefits.
The new R350m recycled polyethylene-terephthalate operation, which is part of the group’s Mpact Polymers business, was commissioned on time and within budget.
Paper business revenue for the year was up 11.8% to R7bn.
Underlying operating profit for the business had risen 13% to R803m on higher selling prices and a favourable product mix, Mpact said. Revenue in the plastics business rose 8.1% to R2.5bn with volume growth of 12.1%, mainly attributable to fruit packaging, bulk bins and beverage pre-forms. It was offset by lower average selling prices, driven by lower polymer prices.
The fast-moving consumer goods business delivered a much-improved result following its restructuring. Underlying operating profit shot up 50.8% to R199m, as the operating profit margin improved to 7.9% from 5.6% in the previous year.
"While Mpact is mainly focused on serving the South African market, several of its customers are exposed to export industries, such as fruit export, and, therefore, continue to enjoy growth rates above those of typical South African manufacturers," said Dirk van Vlaanderen, an investment analyst at Kagiso Asset Management.
"Mpact is not immune to a general slowdown in the South African economy, but its vertically integrated business model, particularly in paper, helps it absorb and offset cost pressures better than most other packaging players," he said.
Mpact CEO Bruce Strong. Picture: SUPPLIED
MPACT says its stellar results for the year to December reflect a strong improvement in the group’s plastics business and a lower effective tax rate.
The packaging maker says the boost in plastics is from good volume growth, cost containment, and the restructuring of the fast-moving consumer goods business in 2014.
CEO Bruce Strong says consistently good results have been attained by continuing to invest in group businesses.
New plant and equipment had saved on electricity usage — to two-thirds of such costs — while significantly increasing production volumes.
"This all translated to bottom line growth," he said on Wednesday.
Revenue of R9.5bn was 10.8% higher than in the previous year, attributable to higher average selling prices, organic volume growth and acquisitions. Underlying operating profit increased 21% to R909m, with operating profit margin increasing to 9.5% from 8.7% in the previous year.
Underlying earnings per share increased 36.3% to 366.9c from 269.2c in 2014.
Mpact said two major capital projects had progressed well during the year. The first phase of the R765m Felixton paper mill upgrade in KwaZulu-Natal was commissioned on time and within budget, with the mill’s subsequent performance reflecting the expected benefits.
The new R350m recycled polyethylene-terephthalate operation, which is part of the group’s Mpact Polymers business, was commissioned on time and within budget.
Paper business revenue for the year was up 11.8% to R7bn.
Underlying operating profit for the business had risen 13% to R803m on higher selling prices and a favourable product mix, Mpact said. Revenue in the plastics business rose 8.1% to R2.5bn with volume growth of 12.1%, mainly attributable to fruit packaging, bulk bins and beverage pre-forms. It was offset by lower average selling prices, driven by lower polymer prices.
The fast-moving consumer goods business delivered a much-improved result following its restructuring. Underlying operating profit shot up 50.8% to R199m, as the operating profit margin improved to 7.9% from 5.6% in the previous year.
"While Mpact is mainly focused on serving the South African market, several of its customers are exposed to export industries, such as fruit export, and, therefore, continue to enjoy growth rates above those of typical South African manufacturers," said Dirk van Vlaanderen, an investment analyst at Kagiso Asset Management.
"Mpact is not immune to a general slowdown in the South African economy, but its vertically integrated business model, particularly in paper, helps it absorb and offset cost pressures better than most other packaging players," he said.
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