South African paper and plastics packaging maker Mpact reported a 13% fall in half-year earnings on Wednesday in the face of challenging trading conditions and subdued consumer demand, sending its share price almost 7% lower.
The company reported headline earnings per share for the six months ended June 30 of 29.7 cents versus 34.3 cents in the prior comparable period. Heps is the main profit gauge in South Africa which strips out certain one-off items.
“The last two years has been very challenging, our significant investments are expected to bear fruit in the second half of the year and beyond,” said the company in a statement.
Mpact, which also has operations in Namibia, Mozambique and Botswana, reported group revenue of R5 billion an increase of 2.9%.
The group has been investing in rebuilding mills, new machinery and acquisitions to expand its recycling capabilities.
Recent investments, which include a R765 million upgrade at its Felixton paper mill and a R150 million corrugator in Port Elizabeth, will start contributing to profit this year and have a full effect in 2019.