Sector News

Nampak upbeat restructure will help restore growth

September 18, 2015
Chemical Value Chain

NAMPAK, an increasingly pan-African manufacturer of nonperishable packaging for beverages and food, continues to “navigate volatile macroeconomic conditions prevailing in a number of our key markets” in 2015.

In a group strategy and progress update for analysts on Thursday, CEO André de Ruyter and other executives highlighted key strategies for each of the company’s divisions.

“In South Africa we have experienced operational difficulties at our glass and Bevcan Springs factories that we are addressing through targeted operational excellence initiatives,” Mr de Ruyter said.

But he said the group had made “solid progress on stabilising and improving the performance at glass” and also in addressing spoilage at its Bevcan Springs site.

This was expected to strongly boost operational results in financial year 2016 after the group took “decisive” steps to strengthen leadership, refocus its portfolio of products, improve operational efficiencies, and tighten cost and capex controls.

Mr de Ruyter said the group’s strategy implementation was at an advanced stage and benefits were expected to flow through to the bottom line in 2016. Nampak also expected the rest of Africa to generate 50% of trading profit by 2020.

In the group’s half-year results to March, broker Imara SP Reid — since renamed Momentum SP Reid Securities — had cited “local disappointment” for Nampak as opposed to “rest of Africa growth”.

Group operating profit fell 9.2% in the most recent reporting period. This was due to a tough South African trading environment and a poor performance by the glass segment. Headline earnings per share from continuing operations fell 8%.

Nampak had sold its corrugated and tissue division for R1.6bn, effective April 1. It also planned to sell the flexible and recycling divisions.

But trading profit from the rest of Africa was now 38% of group trading profit, rising from 27% last year. But rest of Africa margins fell mainly on local currency devaluations and the inclusion of lower margin business in Zimbabwe.

By Mark Allix

Source: BDLive

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