SOUTH AFRICA – Africa’s leading diversified packaging manufacturer, Nampak, has reported a 24% rise in revenue to R14 billion driven primarily by strong results from the Metals division, as a result of a solid performance by Bevcan operations in South Africa and Nigeria.
Erik Smuts, Nampak CEO, said, “Nampak had a successful financial year, driven by the recovery of all the South African metals operations, significant growth in the Nigerian beverage can market, new customers in Zambia and continued strong demand for our products in Zimbabwe.”
Revenue from the Metals division grew 26% to R9.9 billion (US$620m) and trading profit rose 159%.
Bevcan South Africa showcased a stellar performance as revenue grew substantially, driven by the recovery of local volumes and export contracts to North America.
According to the JSE listed company, demand for beverage cans in South Africa improved in the second half with the easing of trade restrictions with higher demand for larger can sizes for beer and energy drinks.
Bevcan Nigeria experienced a surge in demand and delivered double digit volume and revenue growth for the year, exceeding all expectations. An additional body maker was installed in May 2021 to increase output and accommodate higher demand.
This momentum in growth is expected to continue into the coming year, albeit at a reduced rate as our production line is already operating close to full capacity.
However, low demand for beverage cans continued in Bevcan Angola amid a weak economy and pandemic restrictions.
Management kept operating costs as low as possible and capitalised on lower input costs, which improved profitability. Line 1 was converted from steel to aluminium and is being commissioned.
Performance at its DivFood’s division in South Africa improved significantly as it successfully restructured its operations and reversed a significant loss made in the prior year.
DivFood’s general metals business in Nigeria increased revenue marginally in 2021. The rationalisation of operations and simplification of its product offering delivered improved profitability for the year.
Nampak Tanzania and Kenya, albeit small contributors to the group, showed a marked improvement to profitability relative to the previous year, following restructuring and simplification initiatives in the prior period.
High demand for plastics, paper packaging boost growth
Meanwhile, Plastics’ revenue grew 21% to R3 billion (US$187m), driven by very strong demand in Zimbabwe and the recovery of the South African businesses.
The strong performance was achieved against a backdrop of global supply chains shortages of raw materials as well as civil unrest in July 2021 in South Africa that led to the temporary closure of some key customers’ operations and the disruption of supply chain routes.
Cartons South Africa performed well and overall revenue improved, as conical cartons sales recovered with the easing of pandemic related restrictions.
The performance of Zimbabwean plastic operations exceeded expectations and revenue was boosted in second half along with profitability.
Megapak Zimbabwe and CMB Zimbabwe performed well in a challenging economic environment and experienced double-digit revenue growth for both businesses.
In its third division, paper, revenue grew 9% as pandemic restrictions eased in most markets and trading conditions improved, leading to trading profit growth of 18%.
The volumes from Zimbabwean operations grew materially, although volumes in Malawi and Kenya were negatively impacted by the pandemic.
Nampak expects improved performance
Overall, Nampak’s trading profit improved by 109% to R1.4 billion (US$87m) largely as result of cost saving initiatives at DivFood, significantly improved trading conditions in South Africa, Nigeria and Zimbabwe, new customers in Zambia and restructuring at Plastics South Africa.
Operating profit before net impairment losses increased significantly to R1.2 billion (US$75m) from a loss of R283 million. Profit for the year improved significantly to R377 million (US$23.61m) from a R4.0 billion (US$250m) loss.
Earnings improved to R207 million (US$12.96m) from a R3.5 billion (US$219m) loss, with earnings per share and headline earnings per share both rising more than 100% to 32.1 cents and 62.3 cents respectively.
Smuts concludes, “We expect improved demand in all areas of our business in the new financial year. All our operations should benefit from the easing of pandemic restrictions.”
“Nampak is now in a better position to service customers using an improved cost base and will continue building trust with all stakeholders.”