A paper mountain to climb
ANALYSIS: Sombre outlook for Mpact
Mpact has encountered one challenge after another, which has caused its share price to nosedive
Following its unbundling by Mondi in July 2011 Mpact could seemingly not put a foot wrong as it went on to double its headline EPS (HEPS) in its first three years as a listed company. Then the wheels started to come off. The paper and plastics packaging group was struck by an avalanche of problems in its year to December 2016, including steeply rising input costs, flagging demand and start-up problems at a new PET plastics recycling plant. The difficulties sent Mpact’s HEPS diving by a third, and precipitated a 25% cut in its final dividend. The rot worsened in the company’s latest six months to June, with the group reporting a further 64% slump in HEPS to 34c/share and a halving of its interim dividend. Mpact’s management has done what it could to address challenges, most notably resolving the problem of insufficient grinding capacity at its PET recycling plant and limiting fixed costs to a 4.9% rise. But its biggest problem, soaring costs of paper for recycling, is largely outside...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.