Mpact, a packaging company in South Africa's paper and plastics sector, is placing renewed focus on opportunities in the fruit industry, even as it navigates broader economic challenges. The company reported a 29.9% decline in headline earnings per share to 323.6 cents but highlighted a strong operational cash flow of approximately $99 million. Net asset value rose by 6% to about $1.89 per share.
Despite a decrease in underlying operating profit to $48 million from $63 million, Mpact's Bins & Crates business—closely linked to the agricultural sector—recorded strong performance. Operating profit in this division surged 96%, driven by a 17% increase in volumes. Demand for crates, particularly for avocados and blueberries, grew substantially in the second half of the year, reflecting the sector's expansion and Mpact's ability to meet rising requirements from fruit exporters.
The paper-converting business also saw steady sales volumes and slight price increases, supported by improved supply capabilities tailored to the fresh fruit sector across various regions. Additionally, the Paper business, which generated $573 million in revenue (a 2.7% increase), benefited from enhanced containerboard export demand in late 2024, aligning with packaging needs for fruit exports.
Mpact's strategy continues to support agriculture through investment in infrastructure and product development. The $68 million upgrade of the Mkhondo paper mill, expected to be completed by June 2025, aims to create high-value export packaging products, potentially strengthening Mpact's position in the fruit export supply chain.
CEO Bruce Strong emphasized a positive outlook for the fruit export sector, noting that further growth in this area would benefit the Paper Converting and Bins & Crates businesses. He also expects an improvement in the profitability of the Plastics FMCG business in the coming year.
While broader financial indicators showed mixed performance, Mpact's engagement with the fruit sector demonstrates a strong alignment with agricultural growth trends. The company's investments and product diversification aim to support long-term sustainability in packaging solutions for fresh produce.
Source: IOL