Nampak invests US$1.3m in capacity expansion

LIVINGSTONE MARUFU

Leading packaging manufacturer, Nampak Zimbabwe Limited, invested US$1.3m in expansion and replacement projects at Megapak and CarnaudMetalbox (CMB) as part of efforts to boost production capacity and improve operational efficiencies across its factories.

The capital injection played a key role in strengthening overall output and supporting improved volumes during the period under review.

In a statement accompanying half-year results for the six months to March 31, 2026, managing director John Van Gend said the expenditure had a positive impact on performance.

“Capital expenditure of US$1.3 million relates to expansion and replacement expenditure at Megapak and CMB. The group continues to evaluate projects aimed at maintaining and improving capacity and efficiency,” he said.

The investment comes as South African packaging group Nampak continues to pursue the sale of its controlling stake in Nampak Zimbabwe, despite the collapse of a previously proposed US$25m disposal to local diversified group TSL Limited last year.

In its 2026 interim results, the group said the planned disposal of its 51.43% shareholding in Nampak Zimbabwe was still underway, with discussions ongoing with potential acquirers. The Zimbabwean unit remains classified as an asset held for sale as Nampak advances its exit strategy from the local market.

Van Gend said shareholders were being kept informed of developments.

“Nampak Zimbabwe Limited’s shareholders are reminded that its ultimate parent company, Nampak Limited, continues to disclose its 51.43% shareholding in NZL as an asset held for sale as ongoing discussions are being held with potential acquirers,” he said.

The disposal is expected to reduce group net debt and limit exposure to risks associated with the Zimbabwean operating environment.

In October 2024, TSL had announced an offer to acquire Nampak’s majority stake for US$25m, a proposal that was initially accepted, with preparatory processes for regulatory and shareholder approvals underway.

The deal was also expected to trigger a mandatory offer to minority shareholders once completed, in line with local regulations. However, the transaction failed to reach completion.

By September 2025, Nampak confirmed that TSL had withdrawn from the agreement, despite completing due diligence and securing competition authority approval, citing changed circumstances that made it difficult to justify the acquisition to its shareholders. The deal was subsequently terminated by mutual agreement.

Nampak has already exited Nigeria, another market that exposed the group to significant foreign currency volatility following the sharp depreciation of the naira.

Operationally, group volumes were 25% above the prior period, largely driven by carryover late-season tobacco case orders from the domestic tobacco sector. However, momentum slowed in the second quarter as demand softened in some segments amid intensifying competition.

PET preform demand remained firm, while commercial carton and metal packaging volumes at Hunyani and CMB were subdued due to weaker demand conditions.

Revenue for the period rose 10% to US$41.7m, supported by stronger demand for tobacco packaging.

However, rising raw material input costs and aggressive pricing from competitors across all segments led to gross margin compression as the group sought to maintain market share. This resulted in lower trading profits compared to the prior period.

At Hunyani Corrugated Products Division, sales volumes were 54% ahead of the previous year, supported by strong tobacco-related demand. The group expects firm demand for the new season, underpinned by a projected improvement in tobacco output.

Commercial volumes, however, remained 6% below the prior period, despite a second-quarter recovery driven by orders from traditional customers in a highly competitive market.

In the Cartons, Labels and Sacks Division, volumes improved in the second quarter but were down 3% overall. Demand for tobacco paper wrap recorded significant growth, while commercial packaging remained under pressure.

Megapak recorded a 5% increase in sales volumes, although customer uptake slowed compared to first-quarter performance. PET and preform categories remained positive, despite rising competition, while HDPE volumes declined 15% due to cyclical demand patterns.

Ruwa operations were negatively affected by persistent power outages, which worsened during the period, leading to increased plant breakdowns and reduced operational efficiency due to frequent stoppages.

CarnaudMetalbox volumes declined by 2% compared to the prior period, though this marked an improvement from the first quarter. Metal packaging volumes remained under pressure due to earlier supply chain delays, while HDPE volumes rose 8%.

Closures, however, fell 10%, affected by plant breakdowns in the first quarter.

The board did not declare an interim dividend, opting to preserve liquidity for critical capital expenditure requirements.

The group remains optimistic about long-term prospects, citing expectations of a more stable economic environment that could support improved profitability.

Going forward, management said the focus will remain on operational efficiency, cost optimisation, and targeted capital investment, while continuing to explore new growth opportunities.