Mpact sees 15% dip in EBITDA, operating profit drops 26% amid tough trading conditions

SOUTH AFRICA – Mpact, South Africa’s largest paper and plastics packaging group, has flagged a sharp decline in earnings for the first half of 2025, citing persistent headwinds in the local and global trading environment.

In a trading update ahead of its interim results, the JSE-listed packaging and recycling company said it expects a 15% year-on-year decrease in earnings before interest, tax, depreciation and amortization (EBITDA) and a 26% fall in underlying operating profit for the six months ended June 30.

This compares with EBITDA of R731-million (US$41.39m) and operating profit of R423-million (US$23.95m) for the first half of 2024.

Despite the earnings pressure, group revenue from continuing operations is expected to rise by approximately 3%, up from R6.17-billion (US$349.39m) in the comparable 2024 period.

The group also made headway in reducing its net debt to R2.99-billion (US$169.31m), down from R3.23-billion (US$182.91m) a year earlier.

Mpact said weak consumer demand and subdued business sentiment, despite marginal improvements in interest rates and inflation, were the main culprits behind the drop in performance.

“The trading environment remained persistently challenging,” the company said, adding that progress continues on its strategic development projects targeting higher-margin, sustainable products in growth sectors.

The company also provided earnings guidance, forecasting earnings per share (EPS) from continuing operations to be between 88 cents and 100 cents, reflecting a decline of 29% to 19.3% compared to 123.9 cents in the prior period.

Similarly, headline earnings per share (HEPS) are expected to decrease by 28% to 18.2%, down from 122.2 cents.

Mpact’s paper division is expected to see revenue growth of around 7%, buoyed by increased containerboard sales volumes and export market gains.

However, this was partially offset by weaker local demand for cartonboard and corrugated products.

Higher input costs, particularly recovered paper and energy also eroded margins, despite the revenue increase.

No commercial downtime was reported at its Felixton and Mkhondo mills; however, weak domestic demand and cheaper imports led to some downtime at the Springs mill.

In contrast, the plastics business experienced a 15% decline in revenue. The Wadeville FMCG plant was particularly affected following the expiration of two major contracts in 2024. While some replacement customers have been secured, volumes have yet to fully recover.

Mpact expects a stronger second half, particularly in the bins and crates segment, which traditionally experiences higher sales toward the end of the year.

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