SOUTH AFRICA – Africa’s largest diversified packaging manufacturer, Nampak, continues to register bullish performance reporting nearly a quarter rise in revenue in the nine-month period ended 30 June 2021.
In a trading update, the packaging supplier indicated that trading conditions improved significantly for the 3Q21 versus the comparative period in 3Q20, when most of its businesses were impacted by a combination of hard lockdowns and alcohol bans in many of the geographies where the group operates.
“Improved trading conditions, successful restructuring and cost savings initiatives have resulted in a 24% increase in revenue and significant improvements in operating results for the nine-month period ended 30 June 2021,” highlighted Nampak.
In its first half year period, the can maker’s headline earnings per share (HEPS) jumped significantly to 17.6c, from 0.3c registered in the corresponding period in 2020.
Despite of the improvement in profit earnings, the group’s revenue was unchanged at R6.5 billion (US$472m), as the growth in the Metals division in Nigeria and South Africa were muted by subdued performance from other operations in the rest of Africa such as in Angola.
Meanwhile, export sales boosted revenue at Bevcan South Africa and earning was also up in DivFood South Africa and stable in the Plastics division and Zimbabwean operations.
Its operating profit increased by 89% to R543m (US$39.45m), mainly due to the reduction of net devaluation losses from exchange rate movements, lower retrenchment and restructuring costs and non-recurrence of capital items.
Included in operating profit were impairments of R14m (US$1.02m), finance costs of R271m (US$19.69m), reduced finance income of R16m (US$116,000), primarily due to significantly lower interest received on US-linked kwanza bonds, and income tax of R101m (US$7.34m).
Profit for the period increased to R171m (US$12.42m) from a R2.9 billion (US$210m) loss in the comparative period.
Growth in the group profitability was driven by its strategy to simplify and optimise operations, coupled with working capital management and prudent capital expenditure, which resulted in substantially improved cash generation.
In a bid to reduce its debt balance, the company used proceeds from the disposals of Glass division and Cartons Nigeria to shrink its debt by 32% to R5.8 billion (US$421m) from R8.5 billion (US$617m) in March 2020.
According to report by Fin24, the group has been on a restructuring drive and aims to reduce its R5.8 billion (US$421m) debt by R1 billion (US$69m) by the end of September.
The R1 billion (US$69m) reduction will be done through asset disposals or a capital raise.
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