Wrap Text
Unaudited Interim Results and Cash Dividend Declaration for the Six Months Ended 30 June 2026
Mpact Limited
(Incorporated in the Republic of South Africa)
(Company registration number 2004/025229/06)
Income tax number: 9003862175
JSE Share Code: MPT
JSE ISIN: ZAE000156501
A2X Share Code: MPT
("Mpact" or "the Group" or "the Company")
UNAUDITED INTERIM RESULTS AND CASH DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED
30 JUNE 2026
KEY FINANCIAL DATA
- Cash generated from operations of R448 million (H1 2025: R173 million)
- Net debt reduced to R2.6 billion from R3.0 billion in the prior period
- EBITDA from continuing operations of R614 million (H1 2025: R642 million)
- Operating profit from continuing operations of R284 million (H1 2025: R337 million)
- Earnings per share from continuing operations of 50 cents (H1 2025: 105 cents)
- Interim dividend per share of 15 cents
- Net asset value per share of R36.34
Bruce Strong, Mpact Chief Executive Officer, said: "The Group made good progress against its objectives
in a difficult trading environment. The improved performance in Paper Converting and Plastics reflects the
benefits of our focus on growth sectors and higher-margin sustainable products. Stronger cash generation,
together with disciplined capital allocation and operational efficiency initiatives, is contributing to
a stronger balance sheet. Management remains focused on converting the enhanced asset base into improved
earnings, cash generation and returns from recent strategic investments."
OVERVIEW
The six months ended 30 June 2026 were characterised by a subdued macroeconomic environment,
weak domestic demand and low levels of business confidence. While economic conditions in South Africa
showed modest improvement during the first quarter, trading conditions deteriorated materially during the
second quarter following the escalation of conflict in the Middle East. The resulting increase in fuel, freight
and certain raw material costs contributed to a sharp rise in inflation and placed further pressure on
consumer spending and industrial activity.
Global paper and packaging markets remained challenging throughout the period. Structural oversupply in
containerboard and cartonboard markets, coupled with subdued industrial demand in many regions,
continued to place pressure on paper selling prices despite rising input costs.
The agricultural sector, an important driver of packaging demand, remained one of the more resilient areas
of the economy and benefited from strong export crop volumes early in the year. However, adverse weather
conditions, including flooding and hailstorms in parts of the Eastern and Western Cape, disrupted harvesting
and packing activities and negatively affected demand across some packaging categories.
Notwithstanding these headwinds, Mpact's Paper Converting and Plastics businesses delivered volume
and profitability growth, supported by progress on strategic projects in selected growth sectors and
continued investment in innovative, higher-margin and sustainable products. These improvements were,
however, more than offset by margin pressure in Paper Manufacturing driven by higher input costs and
lower selling prices.
The coated cartonboard machine, BM6, at the Springs mill was shut on 10 May 2026 and has been
classified as a discontinued operation. The uncoated coreboard machine, BM3, continues to operate and
is reported under continuing operations. During the period, the Group also commenced the rationalisation
of its recycling collection footprint to improve operational efficiency and reduce costs. Together, these
actions form part of the Group's portfolio optimisation programme, aimed at improving competitiveness,
aligning capacity with market demand and enhancing returns.
COMMENTARY FROM CONTINUING OPERATIONS
FINANCIAL REVIEW
Group revenue for the period increased by 1.1% to R5.96 billion. The increase was supported by higher
sales volumes in Paper Manufacturing, Paper Converting and Bins & Crates, as well as a more favourable
product mix in FMCG Wadeville, partly offset by lower containerboard selling prices.
Gross profit increased by 3.1% to R2.35 billion, with the gross margin improving to 39.4%, primarily due
to an improved sales mix. The benefit was partly offset by higher transport, energy and polymer costs,
particularly in the second quarter.
Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 4.4% to R614 million
(H1 2025: R642 million) mainly due to lower profitability in Paper Manufacturing which more than offset
gains in the Paper Converting and Plastics businesses.
Operating profit decreased by 15.7% to R284 million, mostly due to lower EBITDA and an increase in
depreciation and amortisation following the capitalisation of the Mkhondo mill upgrade in December 2025.
Cash generation improved materially, with cash generated from operations increasing to R448 million
compared with R173 million in the prior period. Net debt reduced to R2.6 billion (30 June 2025: R3.0 billion),
supported by improved working-capital management and the closure of BM6. The Group remains well
within its bank covenants.
Return on capital employed was 9.2% reflecting the impact of recent strategic capital investments not yet
fully reflected in earnings and lower profitability.
Paper Business
Revenue in the Paper business increased marginally to R4.98 billion (H1 2025: R4.97 billion), as higher
sales volumes in Paper Manufacturing and Paper Converting, together with an improved sales mix, were
largely offset by lower selling prices.
Gross profit increased by 3.4% compared with the prior period, mainly due to lower raw material prices
and a more favourable product mix. These were partially offset by higher variable selling expenses due to
increased fuel costs and paper exports, as well as higher electricity prices.
Operating profit declined by 24.6% to R278 million (H1 2025: R368 million). The decrease was mainly due
to lower profitability in Paper Manufacturing and higher depreciation and amortisation following the
capitalisation of the Mkhondo mill upgrade.
Paper Manufacturing was the main detractor from Group performance. Containerboard sales volumes
increased by 2.9%, but lower selling prices and higher input costs had an adverse impact on profitability.
This reflects the global cyclical downturn in the paper industry, subdued South African industrial demand,
pricing to counter containerboard imports and higher depreciation following the capitalisation of the
Mkhondo mill upgrade. Production at the Mkhondo mill was impacted by operational challenges following
the pulp mill upgrade which have since been resolved. Following the closure of BM6, management is
focused on stabilising the Springs mill site, optimising BM3 and pursuing import protection and other
actions to improve its competitiveness.
Paper Converting achieved revenue growth of 2.4%, driven by an increase in sales volumes. Operating
profit increased modestly, supported by strong performances from Detpak and the contribution from
Seyfert, partly offset by depressed selling prices.
Plastics business
Revenue in the Plastics business increased by 5.7% to R989 million (H1 2025: R936 million), supported by
higher sales volumes in Bins & Crates and a more favourable product mix in FMCG Wadeville.
Gross profit increased by 2.1%, although gross margin declined as higher polymer prices, electricity costs
and variable selling costs partly offset the increase in revenue. Trading in the second quarter became more
difficult as polymer prices increased sharply following the escalation of the Middle East conflict.
Operating profit improved significantly to R45 million, compared to R7 million in the prior period, reflecting
the improvement in gross profit and a reduction in fixed costs following restructuring activities at Bins &
Crates and FMCG Wadeville. Historically, profitability in the Plastics business, particularly Bins & Crates,
was heavily weighted towards the second half of the year, and we expect 2026 to be similar.
Bins & Crates continued to experience good growth in jumbo bins and export crates, which was somewhat
offset by poor demand for beverage crates.
The FMCG business reported higher profitability as Pinetown and Atlantis benefited from better utilisation
and stronger customer demand, while Wadeville continued to benefit from an improved product mix and a
realignment of its product offering and cost base.
Net finance costs
Net finance costs increased by 13.1% to R135 million (H1 2025: R119 million), notwithstanding lower
period-end net debt. The increase is mainly due to the non-recurrence of R36 million of interest capitalised
to the Mkhondo project in the prior period.
Taxation
The effective tax rate for continuing operations of 27.5% is in line with the statutory rate (June 2025: 26.9%).
Earnings per share
Headline earnings per share and basic earnings per share decreased to 48.1 cents (H1 2025 - restated:
104.1 cents) and 50.4 cents (H1 2025 - restated: 105.2 cents), respectively.
Net debt (total operations)
Net debt of R2.6 billion was lower than the prior period (June 2025: R3.0 billion). Cash generated from
operating activities was partly offset by retrenchment and other closure costs related to BM6 of R104 million
and working capital outflows, typical for the first half of the year.
DISCONTINUED OPERATION
As previously mentioned, BM6 at the Springs mill has been classified as a discontinued operation. BM6
reported an underlying EBITDA loss of R25 million and an underlying operating loss of R30 million for the
period. The closure resulted in once-off restructuring, impairment and retrenchment costs amounting to
R299 million, which are classified as special items and excluded from underlying profit. These costs comprise
cash retrenchment and restructuring costs of R104 million, together with non-cash charges relating to the
impairment of plant, equipment and capital spares of R180 million, and inventory of R15 million. The cash
costs incurred were more than offset by the recoupment of working capital related to BM6.
OUTLOOK
Economic activity is expected to remain subdued, while elevated fuel, freight, polymer and other input
costs are likely to continue affecting margins, supply chains and customer demand. Municipal infrastructure
shortcomings continue to drive additional costs across our manufacturing operations, while double digit
increases for water and electricity tariffs are difficult to recover. An influx of imported products continues
to put pressure on domestic industries, including some of Mpact's customers.
Global paper markets, especially for recycled containerboard and cartonboard, remains oversupplied.
However, prices for certain paper grades are increasing due to input cost pressure, higher freight costs
and the continued conflict in the Middle East. Pricing and margins in Paper Manufacturing are therefore
expected to remain under pressure in the third quarter, with any improvement in quarter four dependent
on the level of price increases. Both containerboard paper mills are fully sold with no planned commercial
downtime.
Agricultural demand remains a positive driver and the Citrus Growers Association continues to forecast
further growth in citrus exports over the medium term, although there may be some short-term setbacks
due to the flooding in the Eastern and Western Cape. This should support demand for corrugated cartons
and plastic crates.
The Mkhondo mill upgrade project remains in its optimisation phase. While the pulp mill is delivering on its
objectives in terms of throughput and quality, the development of the market for SLS continues. The SLS
quality improved significantly following interventions in the first half of 2026, but orders have not been at
the level anticipated. The additional depreciation and interest charges arising from the recent capitalisation
of the project are not expected to be fully offset by the incremental revenue in 2026.
The Plastics business is expected to deliver an improved full-year result compared with the prior year,
supported by the continued recovery at FMCG Wadeville, as well as good volume growth in plastic crates
for the agricultural sector. The extent of this improvement remains dependent on polymer price stability
linked to developments in the Middle East.
The Group's performance is historically weighted towards the second half of the year, supported by
seasonal demand patterns in key markets, while the full benefits of recent strategic capital projects,
including the Mkhondo mill upgrade, are expected to support medium-term growth and margin
improvement.
Mpact's strategic focus has recently shifted from capital expansion to realising the full potential of its
modernised asset base. Key priorities for the rest of 2026 include optimising returns from recent
investments, accelerating the commercialisation of SLS, driving efficiency improvements, and advancing
targeted portfolio optimisation. The Group will continue to prioritise cash generation, working capital
discipline and margin improvement, while maintaining strict capital allocation principles.
BOARD CHANGES
There were no Board changes during the period under review.
DIVIDENDS
The Board declared an interim gross cash dividend of 15 cents per ordinary share for the six months ended
30 June 2026 (June 2025: 30 cents per ordinary share). A dividend withholding tax of 20% will be
applicable to all shareholders who are not exempt, which equates to a dividend of 12 cents per ordinary
share net of dividend withholding tax. The dividend has been declared from income reserves.
The Company's total number of issued ordinary shares at the date of this announcement is 149,453,688.
Mpact's income tax reference number is 9003862175.
Salient dates for the cash dividend distribution
Event 2026
Publication of dividend declaration Monday, 24 August
Last day of trade to receive a dividend Tuesday, 15 September
Shares commence trading "ex" dividend Wednesday, 16 September
Record date Friday, 18 September
Payment date Monday, 21 September
Share certificates may not be dematerialised or re-materialised between Wednesday, 16 September 2026
and Friday, 18 September 2026, both days inclusive.
FINANCIAL SUMMARY
Six months Six months
ended ended
30 June 30 June
R'million 2026 2025*
Continuing operations
Revenue 5,957 5,892
Underlying operating profit1 284 337
Underlying profit before tax2 139 227
Basic EPS (cents) 50.4 105.2
Basic underlying EPS (cents) 50.4 105.3
Basic HEPS (cents) 48.1 104.1
Interim gross dividend per share (cents per share) 15 30
Total operations
Basic EPS (cents) (111.7) 94.2
Basic underlying EPS (cents) 35.5 94.2
Basic HEPS (cents) (87.6) 93.0
Net debt 2,633 2,985
Net asset value per share (cents) 3,634 3,585
* The comparative figures have been restated to present Springs mill BM6 as a discontinued operation.
1. Underlying operating profit is the Group's operating profit before special items.
2. Underlying profit before tax is the Group's profit before tax before special items.
The Group presents certain measures of financial performance, position or cash flows that are not defined
or specified according to International Financial Reporting Standards (IFRS). These items are referred to as
special items and are defined in the Group accounting policies included in the condensed Consolidated
Interim Financial Statements for the six months ended 30 June 2026.
This short-form announcement is the responsibility of the directors and is only a summary of the information
in the interim financial statements and do not contain full or complete details. This short-form announcement
has not been reviewed or audited by the Company's external auditor. Any investment decision should be
based on the unaudited financial statements which is available on our website:
https://www.mpact.co.za/investor-relations/financial-results/2026/HY2026.pdf, and on
https://senspdf.jse.co.za/documents/2026/JSE/ISSE/MPT/HY2026.pdf
The announcement is also available for inspection at our registered offices at no charge during office hours.
PCS Luthuli
Chairman
BW Strong
Chief Executive Officer
24 August 2026
COMPANY PROFILE
Mpact is the largest paper and plastics packaging and recycling business in southern Africa, employing
4,540 people (June 2025: 4,705 people), and generating revenue of R6.0 billion from continuing operations
in the six months ended 30 June 2026.
Sales in South Africa account for approximately 87% of Mpact's revenue for the current period while the
balance was predominantly to customers in the rest of Africa.
The Group operates across 29 sites, comprising 21 manufacturing sites, and 8 recycling operations.
Proximity to our customers contributes to faster response times, reduces transport costs and creates
economies of scale. Our integrated business model is uniquely focused on closing the loop in plastic and
paper packaging through recycling and the beneficiation of recyclables.
Our strong customer relationships, a thorough understanding of the sectors we operate in, and our
commitment to innovation allow us to continue creating fit-for-purpose sustainable packaging solutions as
well as value-added services that anticipate our customers' needs.
DIRECTORS
Independent Non-Executive:
PCS Luthuli (Chairman)
M Makanjee
DG Wilson
ABA Conrad
FC Futwa
S Mayet
CD Raphiri
Executive:
BW Strong (Chief Executive Officer)
JJ Snyman (Chief Financial Officer)
Company secretary:
CorpStat Governance Services (Pty) Ltd
Registered office:
4th Floor
No.3 Melrose Boulevard
Melrose Arch
2196
Transfer secretaries:
JSE Investor Services (Pty) Limited
One Exchange Square, 2 Gwen Lane
Sandton, 2196
Sponsors:
The Standard Bank of South Africa Limited
30 Baker Street
Rosebank
2196
(PO Box 61344, Marshalltown, 2107)
Auditors:
PricewaterhouseCoopers Inc. (PwC)
4 Lisbon Lane, Waterfall City
Jukskei View
2090
(Private Bag X36, Sunninghill, 2157)
Date: 24/08/2026 06:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
