SOUTH AFRICA – Africa’s leading packaging company Nampak has released a trading update showing it had secured US$894.04 million long-term funding package in the 11-month period ended August, sending its share price 2.02% higher at $1.06 on bourse, reports IOL Business Report.
The period was characterized by a strong first-half growth as volumes at Bevcan South Africa softened in the second half of the year due to a new entrant and significantly weaker consumer demand.
The company said volume growth for the full year is expected to decline but trading profit will be higher due to internal operating efficiencies and cost savings.
Yearly results will also be boosted by higher volumes from DivFood, its division of plain and decorated food cans at the back of on the back of a better fish catch and strong vegetable volumes in both halves of the year.
The closure of the Epping beverage can line was successfully implemented and further overhead cost rationalization opportunities are under investigation.
It was able to repatriate US$216.52 million this year from easing liquidity conditions in markets including Angola and Nigeria.
The packaging group said a hedge it took out in Angola has shielded its capital in that country from a potential loss of US$104.7 million.
Volumes in Bevcan Angola in the second half of the financial year were lower as a result of limited in-country foreign currency impacting the purchase of raw materials and can ends which are now supplied by Bevcan South Africa.
The group is planning to invest US$20.95 million in Angola and Nigeria.
Nampak has restarted the project to invest some US$13 million in converting its tinplate production line to manufacture slender aluminium cans to meet market demand.
In Nigeria, the firm sustained volume growth in its operations in the second half, and this is expected to be higher by double digits compared to the prior year.
The plastic division was impacted by loss of volume and unstable costs but a cost reduction project has been developed together with the implementation of the first plant and depot closures.
Plastics Zimbabwe continued to perform well with strong cash generation led by a strong performance from Megapak despite of the challenging in-country dollar liquidity.
Hunyani, its paper manufacturing division in Zimbabwe continued its strong performance into the second half despite lower volumes in other territories in the Rest of Africa.
It is expected that the contract signed with a major customer in Cartons Nigeria will benefit from good demand from this and other customers in the second half.
The glass market was softer in the second half as result of weaker consumer demand and a loss by this division is expected for the period.
Nampak operates from 28 sites in South Africa, contributing 60% to group revenue; 18 sites in the rest of Africa, contributing 32%; as well as eight sites in the UK, contributing 8%.
