Nampak encouraged by trading results

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Nampak encouraged by trading results

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Published Date: 2021-04-01 | Source: Stephen Gunnion | Author: Stephen Gunnion

Nampak encouraged by trading results

The packaging group says its financial performance is largely in line with expectations, despite Covid-19 restrictions.

Nampak says trading results for the first five months of its new financial year have been encouraging after the end of the previous year was impacted by Covid-19 restrictions. Stronger demand in Nigeria has compensated for softer trading conditions in South Africa due to January's alcohol ban, lifting revenue for the period by 1%.

In a trading update, the packaging group said operating profit for the five months to end-February increased significantly, largely as a result of cost-saving initiatives and a reduction in the devaluation of monetary items in Angola and Nigeria. The comparative period was also impacted by a loss on the disposal of its Cartons Nigeria business.

Bevcan South Africa experienced a partial recovery in local demand over the period, although demand was still lower than normal seasonal volumes. Nampak said the impact of the third alcohol ban, which ended on 2 February, had a delayed impact on demand and consequently its performance for February and March was negatively impacted.

Plastics South Africa performed in line with expectations, but global shortages of raw materials and increased prices moderated the progress made in improving this division's profitability.

The group said the overall performance for its Paper division was below expectations. While demand remained robust in Zimbabwe, its performance in the Rest of Africa was limited by weaker economies as these markets grappled with weaker trading conditions due to Covid-19 restrictions.

Nampak said good progress had been made on mitigating balance sheet risks through reducing its exposure to US dollar funding. US dollar debt declined to 49% of the R6.1 billion gross debt, down from 65%.

The company's interim results are scheduled for release on 28 May. Its shares rose 1.6% to R3.15 yesterday.





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