JSE-listed paper and plastics packaging and recycling company Mpact says it expects to report a 15% decrease in earnings before interest, taxes, depreciation and amortisation (Ebitda) and a 26% decrease in underlying operating profit for the six months ended June 30.

That compares with the Ebitda of R731-million and the underlying operating profit of R423-million reported for the six months to June 30, 2024.

Mpact further expects to report net debt of R2.99-billion, compared with R3.23-billion in the prior period.

Group revenue from continuing operations is expected to increase by about 3%, compared with the R6.17-billion reported for the prior comparable period in 2024.

Mpact says it experienced a persistently challenging trading environment for the first half of this year.

Despite a reduction in interest rates and lower inflation, uncertainty in local and global markets contributed to poor business sentiment and consumer demand remained weak, the company says in a trading statement.

However, good progress is being made on the group’s strategic development projects, which focus on growth sectors and investments in innovative, higher-margin and sustainable products.

Mpact also remains confident in its value-enhancing strategy and future prospects.

The company says it expects earnings per share (EPS) from continuing operations for the six months to end June 2025 to be between 88c and 100c , which is a decrease of between 29% and 19.3% compared with the EPS of 123.9c reported for the prior comparable period.

Similarly, it expects headline earnings per share (HEPS) from continuing operations for the six months under review to be between 88c and 100c, which is a decrease of between 28% and 18.2% compared with the HEPS of 122.2c reported for the six months to June 30, 2024.

Meanwhile, revenue in its paper business is expected to increase by about 7% owing to higher containerboard sales volumes, which were partially offset by lower cartonboard and corrugated sales volumes. No commercial downtime was taken at Felixton and Mkhondo paper mills in the first half of this year.

Further, containerboard sales volumes increased owing to growth in exports and market share gains in the local market, while cartonboard sales volumes were lower than the prior period owing to weak local demand and lower-priced imports, which resulted in some commercial downtime at Mpact's Springs paper mill.

Additionally, corrugated sales volumes are down owing to weak industrial demand. Despite an overall increase in revenue, higher recovered paper prices, energy and fixed costs resulted in lower operating profit for its paper business, the company says.

Its plastics business saw revenue decline by about 15% compared with the prior period.

As anticipated, the group’s fast-moving consumer goods (FMCG) production plant in Wadeville recorded a significant decrease in sales volumes owing to the expiration of two contracts with a major customer in 2024.

Although the business has been able to find replacement customers for some of the lost volumes, the uptake has been slower than anticipated.

Both the FMCG Pinetown and Atlantis operations experienced good sales volume growth owing to new projects and growth from existing customers, it says.

Meanwhile, sales volumes were also down in the bins and crates business mostly owing to lower beverage crate sales, which were somewhat offset by good growth in agriculture crates.

Historically, bins and crates’ sales and profitability have been heavily weighted towards the second half of the year and it expects this year to be similar.

Mpact’s unaudited results for the six months under review will be published on or about August 4.