Gloomy outlook for Nampak

LIVINGSTONE MARUFU

 

Zimbabwe’s largest packaging manufacturer, Nampak Zimbabwe Limited, has indicated that the situation looks gloomy in the fourth  quarter owing to the anticipated crippling shortages of critical raw materials  from South Africa, its biggest source, following recent unrest.

The company’s managing director, John Van Gend, said Nampak heavily depends on raw materials imports from South Africa.

“The fourth quarter performance is likely to be impacted as a result of the recent disturbances in South Africa, which may affect our supply chain logistics and also by the bottlenecks in the global supply chain,” Van Gend said.

Apparently, the supply disruptions will affect other local companies as the country’s industry depends  heavily on South Africa for critical raw materials.

But, the South African manufacturers, are said to be prioritising local industry, meaning  there is a highly likelihood that Zimbabwe industry will suffer. The South African companies will only export to Zimbabwe when they have surplus.

In a trading update to the quarter to June 30, 2021, revenue for the group increased 37% from prior comparative period.

Cumulative revenue for the nine months jumped 26% owing to growth in sales volumes and adjustment of selling prices to reflect the economic trends.

Net working capital during the reviewed period was positive.

The group had a cash holding of ZWL$528m at the end of the third quarter.

Hunyani paper and packaging volumes were 38% in the quarter under review and 23% ahead for the nine months compared to the prior year period.

Volumes in the commercial sector grew by 63% on prior year nine month period led by improved demand and ongoing customer recovery.

Mega Pak volumes increased by 60% in the reviewed period and by 59% for the nine months due to increased demand across all areas of the business.

CarnaudMetalbox volumes grew by 69% and 23% for the quarter and the nine months respectively, compared to the prior comparative periods.

Cumulative metal volumes were up 7% with food can and crowns leading the recovery despite a shortage of tinplate.

However, the tobacco sector was 4% below the prior year nine month period due to the lower tobacco crop last year and the delayed start to packing this year.

The year to date decline in the export market was 19% due to Covid-19 impact in regional markets.

Van Gend said various projects remain under consideration subject to availability of foreign exchange.

He said the company continues to engage with the relevant authorities to regain effective control over its estates.

Nampak wants to rehabilitate estates for timber and agricultural purposes in line with  the government’s declared thrust in this direction.

He said progress has been made at Maganga estate where the company’s eviction notice was implemented, with families concerned being resettled in another part of the estate.

An agreement was reached with ART Holdings Limited for purchase of its  entire shareholding of its 50% share in Softex Tissue Products (Private) Limited.

The investment, which was marked as a “for sale” asset at the interim reporting, was not material to the business operations.

Payments for the sale have commenced and various regulatory aspects concerning the sale are in progress, Van Gend said.

He said foreign currency was more available through the auction system and was supplemented by additional amounts sourced from customers, although still inadequate for the group’s operations.

The foreign currency limitations and delays in disbursements continued to have the effect of creating imbalances within the supply and customer delivery chain, Van Gend said.

 

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