Nampak’s profit surge 41% in half-year despite flat sales

Nampak Limited, the South African beverage can and bottle manufacturer hailed its first-half results which ended on 31 March 2017, as profit surged 41% to R853m (approx. $65m).

“We have delivered improved results, net profit up 41%, despite a tough trading environment,” said Andre de Ruyter, Nampak CEO.

“A major achievement is we were able to improve our operating efficiencies, and managed costs very closely,” he said on Tuesday.

The company which is Africa’s largest diversified packaging group said that revenue fell 1% to R9.3bn (approx. $709m), hurt by a 10% stronger rand/dollar exchange conversion rate from foreign operations and sluggish trading conditions across Africa.

Despite the flat sales, the firm said that it achieved record beverage can sales in Angola, improved results from its South African operations and turned around its general metal packaging business in Nigeria. It notes that its comprehensive operational improvement plan and significant capital expenditures in previous years made room for a reduction in capex by 49% to R470m from a year ago. This initiatives helped boost profits, with trading margins rising 11.9%. However, it emphasized that low consumer confidence continues to weigh on spending and demand for packaging.

The company said it has made great progress with remitting funds from Nigeria, with at least $54m expected to be retrieved before the end of its financial year on 30 September 2017. It added that the combined extraction rate from two of its biggest African markets (Angola and Nigeria) was 80% and 61% of the cash held in these countries was hedged as of 31 March 2017.

de Ruyter stressed that the company continues to focus on managing and optimizing controllable aspects of its business such as costs, asset performance and processes which has so far resulted in savings of R70m.

On outlook for the rest of the financial year, de Ruyter said, “We expect consumer demand to remain subdued for the rest of the year but gains from improved efficiencies, business improvement initiatives as well as cost savings are expected to abate this negative impact.”

He added that the medium to long-term outlook for packaging in Africa remained favourable, underpinned by expected growth in household consumption.

Leave a Reply

Your email address will not be published. Required fields are marked *