Mpact Limited · JSE:MPT
Mpact — H1 2024 Earnings Presentation
29 slides from Mpact's earnings presentation, August 2024
Slide 1: Interim results presentation for the six months ended 30 June 2024
2024 Interim results presentation for the six months ended 30 June 2024
Slide 2: Period in context
01 Period in context
Slide 3: Period in context
Period in context Challenging trading environment, as anticipated • Uncertain socio-political environment leading up to the national elections, persistent loadshedding until March, high inflation and interest rates • Negative business sentiment and weak consumer demand Financial results demonstrate
Slide 4: Period in context
Period in context Consumer demand weak across most sectors throughout the period • No recovery after stage 6 load shedding in September last year • High opening inventories throughout supply chain after subdued 2023 festive season • Followed by weak Easter demand and uncertainty leading up to the el
Slide 5: Delivering on our strategy: Investing for the future
Delivering on our strategy Investing for the future 5
Slide 6: New injection moulding factory, Mpact Plastic Containers, Castleview
New injection moulding factory Mpact Plastic Containers, Castleview • Purpose: Expansion of capabilities to meet customer requirements and extend innovative product offering, including food-grade production facility and automated warehouse • Scope: Property acquisition; setup manufacturing facility
Slide 7: Mkhondo Mill upgrade project, Mpumalanga
Mkhondo Mill upgrade project, Mpumalanga Mkhondo Mill Project Capex budget R1.3 billion including forex movements and inflationary pressures 1H 2025: Pulp plant upgrade, new spray dryer, paper machine modifications Planned completion 2H 2027: Upgraded waste management infrastructure Virgin pulp: 120
Slide 8: Mkhondo Mill upgrade project, Mpumalanga
Mkhondo Mill upgrade project, Mpumalanga 8
Slide 9: Other notable investments: Paper Converting
Other notable investments Paper Converting • Purpose: Expansion of capabilities to meet customer requirements and extend innovative product and Mbombela service offering • Scope: • Converting equipment (Corrugator, RDC, FFG, bag and cup lines): Western Cape, Mpumalanga, Eastern Cape, Gauteng and Nam
Slide 10: Leading the way to smarter sustainable packaging solutions
Leading the way to smarter sustainable packaging solutions across the value chain –a circular economy in motion Box Locks – A world 1st for transit Plastic Free Single Use Packaging – Local paper packaging packaging A 1st in SA retail space recyclability testing – A 1st in SA Protecting our customer
Slide 11: Financial overview
02 Financial overview 11
Slide 12: Financial review
Financial review from continuing operations, excluding Versapak Group revenue • Revenue down 1.1% to R6.2bn 14,000 12,373 12,823 12,000 • Higher average prices offset by a 2.1% decrease in sales 10,000 6,583 volumes R million 6,630 8,000 • Underlying operating profit of R423m 6,000 4,000 • Lower sel
Slide 13: Operating review
03 Operating review 13
Slide 14: Paper Business
Paper Business Segment revenue 12,000 10,715 • Revenue of R5.1bn down 3.3% 10,373 10,000 • Sales volumes down 2.5% R million 8,000 5,458 5,446 • Paper manufacturing sales volumes in line with prior, 6,000 paper converting down 1.4% with growth in agricultural 4,000 4,915 5,269 5,097 sector offset by
Slide 15: Plastics Business
Plastics Business from continuing operations, excluding Versapak Segment revenue • Revenue of R1.1bn up 10.6% 2,500 2,161 2,041 • Sales volumes increased by 2.7% 2,000 • Good growth at Bins & Crates and FMCG, offset by R million 1,500 1168 1192 decline in Preforms & Closure 1,000 500 993 1,097 849 •
Slide 16: Versapak – discontinued operation
Versapak – discontinued operation Disclosed separately in the Interim Financial Statements for the six months ended 30 June 2024, with the assets and liabilities being reported as “held-for-sale” and the Income Statement reported as a “discontinued operation” • Revenue down 11% to R485m June June •
Slide 17: Financial performance
05 Financial performance 17
Slide 18: Variable costs
Variable costs from continuing operations, excluding Versapak 4,500 3 756 3 679 International benchmark recovered paper 4,000 125 prices (OCC) 554 3% 539 (June 2022 = 100) 3,500 457 1% 100 461 3,000 Index 507 2% 75 515 2,500 505 R million 502 1% 2,000 50 1,500 25 1,000 2,033 1,914 Jun-22 Dec-22 Jun-
Slide 19: Fixed costs
Fixed costs from continuing operations, excluding Versapak 1 954 2 071 2,000 308 16% Fixed costs, excluding depreciation and amortisation well 1,800 266 managed, increasing 4.4%, well below inflation 1,600 • Personnel costs, excluding restructure cost of 1,400 696 5% R15m, increased 2.6%; headcount
Slide 20: Financial review
Financial review HY2024 HY2023 change Earnings before interest, tax, depreciation and amortisation (EBITDA) 731 797 (8.3%) from continuing operations Depreciation and amortisation (308) (266) 15.7% Underlying operating profit from continuing operations 423 531 (20.4%) Net finance costs (148) (132) 1
Slide 21: Net debt and facilities
Net debt and facilities December 3,500 Net debt June 2024 June 2023 change 2023 3 230 3,000 2 665 294 Net debt close 3,230 2,640 22.4% 2,665 2,500 224 Net debt average 3,251 2,803 16.0% 2,921 R million 2,000 1,500 2,936 Net finance costs 148 132 12.4% 284 2,441 1,000 Gearing 36.9% 34.4% 2.5 32.9% 50
Slide 22: Movements in net debt
Movements in net debt 1,500 1,000 768 500 0 -165 -88 -111 -73 -70 -83 -500 -253 R million -490 -1,000 -1,500 -2,000 -2,500 -3,000 -2,665 -3,500 -3,230 Net debt at Cash Working Capital Net interest Income tax Dividend paid Acquisition Renewal of Other¹ Net debt at December generated capital expenditu
Slide 23: Working capital and ROCE
Working capital and ROCE Working capital 2 988 5,000 2 804 2 721 76 Return on Capital Employed (ROCE)¹ 25% 71 68 4,000 2,894 2,690 2,719 20% 18.8% 18.7% 3,000 2,000 15% 14.4% ROCE % R million 1,000 1,999 2,317 2,093 10% 0 5% -1,000 -2,062 -1,914 -2,223 0% 2023 2024 -2,000 HY1 Full Year HY1 2023 FY20
Slide 24: Capital expenditure cash flows
Capital expenditure cash flows 1,800 1 537 1,600 114 1,400 • Capital projects on track 361 1,200 • Corporate comprises mainly building and solar projects • Total capital committed of R1.7bn R million 1,000 Contracted and committed of R507m 800 Approved but uncommitted of R1,162m 600 • 2024 HY2 forec
Slide 25: Dividends
Dividends 150 120 • Interim dividend of 30 cents per share 115 (June 2023: 45 cps) 100 • Dividend policy remains unchanged • Cents per share 75 driving long-term value for shareholders; 75 • prudent capital allocation in the context of growth opportunities; and 50 • returning cash to shareholders th
Slide 26: Outlook
06 Outlook 26
Slide 27: Outlook
Outlook Business and consumer sentiment improving • Positive outcome of the national elections • Lower inflation, reduced loadshedding, possible interest rate cut • Mpact well positioned to meet increased demand • Encouraging interventions and trends at Transnet and Eskom Full year earnings expected
Slide 28: Thank you
Thank you Bruce Strong Chief Executive Officer Hannes Snyman Chief Financial Officer For any further Investor Relations questions please contact: Keyter Rech Investor Solutions Marlize Keyter [email protected] | +27 83 701 2021 28
Slide 29: Living by our values, driven by our purpose
Living by our values, driven by our purpose At Mpact we are differentiated by our people who are: Resolute Trustworthy Responsible Driven by our purpose • Setting and achieving • Ethical • Taking care of their safety, of: challenging targets • Transparent health and personal • Providing our customer