Mpact H1 operating profit up 21.5%

Mpact, the paper and plastics packaging business, and recycling giant, the largest in Southern Africa, has seen its shares decline by around 13% this year, underperforming the broader market. This is primarily due to investor caution regarding stocks heavily exposed to the South African economy. Despite this, Mpact recently released its interim results, announcing the resumption of dividend payments, signaling confidence in its business outlook. Bruce Strong, the CEO of Mpact, sheds light on the company's resilience and growth amidst the challenges faced. Strong emphasizes that Mpact's product range is not solely dependent on consumer spending growth in South Africa. The company caters to diverse sectors such as fruit export, home deliveries, and refuse removal, which continue to see steady demand. These factors, coupled with global supply chain constraints favoring local producers, present opportunities for Mpact to thrive despite subdued consumer spending growth in South Africa. Challenges such as energy and water provision issues pose operational hurdles, but Mpact has proactively invested in self-sufficiency measures like solar installations to mitigate reliance on external providers. The company's 1.2 billion rand investment program underscores its commitment to capitalizing on future opportunities. Strong lauds the government's recent energy plan, which removes caps on self-generation, as a positive step that will enhance Mpact's energy security and operational efficiency. He mentions that Mpact is committing approximately 170 million rand to solar power generation, aiming to expand its renewable energy capacity further. Addressing input cost pressures, Strong acknowledges the escalating prices of key raw materials, energy sources, and process chemicals, necessitating price adjustments. Mpact anticipates double-digit cost increases that will be passed on to customers, albeit with considerations for their own cost pressures. The company is engaging with customers to navigate these challenges collaboratively and ensure sustainable business operations.