Nampak toasts the reopening of bottle stores


Nampak toasts the reopening of bottle stores


Published Date: 2020-06-01 | Source: Stephen Gunnion | Author: Stephen Gunnion

Nampak toasts the reopening of bottle stores

The packaging group says it has been impacted by weak demand that has been aggravated by the Covid-19 lockdown.

Nampak has slumped into a first-half loss due to falling demand for its packaging products and after it impaired its businesses in Angola and Nigeria by R3 billion. The packaging group says it's now focused on limiting the added pressure posed by Covid-19 on already burdened economies by cutting costs, preserving cash and reducing capital expenditure.

Although the group was designated as an essential services provider under the lockdown regulations, it has been affected by reduced consumer demand, the shift by customers to preserve cash and the recent ban on alcohol sales. Even ahead of the lockdown, it said SA demand was lower than expected over the festive season.

The recent slump in the oil price and the impact of Covid-19 on the growth potential of the Angolan and Nigerian markets resulted in a R2.2 billion goodwill impairment at its Nigerian business and a R800 million asset impairment in Angola. While Bevcan Nigeria performed well in the six months to end-March due to volume growth, the Nigerian outlook had since deteriorated. Its beverage can operations in Angola and South Africa failed to meet expectations over the period due to market contractions and the loss of a key customer the previous year. The performance of its Zimbabwe business was impacted by hyperinflation, currency shortages and a lack of economic growth. However, its SA Plastics business returned to profitability as its turnaround strategy continued to pay off.

Revenue fell 17% to R6.5 billion over the six months and trading profit reduced by 39% to R633 million. The group reported a loss per share of R408.9c, down from earnings of 137.4c last year. Excluding the impairment charge, headline earnings per share from continuing operations fell 95% to 7c. Cash generated from total operations rose 277% to R667 million. The group doesn't plan to resume dividend payments until debt levels are significantly reduced.

The group sold its Nampak Plastics Europe business and received gross proceeds of R2 billion for the assets disposals, including R1.6 billion for its glass business and R400 million for Cartons Nigeria. The net proceeds of R1.6 billion, as well as healthy cash transfers from Angola and Nigeria, would be used to reduce debt. It said its strategic objectives included a simplification of its business to reduce its risk profile and create more value in the remaining business units.

Nampak's shares closed 2.7% higher at R1.15 on Friday.


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