Photo by: Duane Daws
JSE-listed packaging company Nampak’s headline earnings a share for the six months to March 31, fell by 8% year-on-year to 101.6c a share, owing to challenging trading conditions in South Africa.
“Nampak’s group performance had a mixed start to the current financial year with the first-half results benefiting from the continued growth and strong performance of our businesses in the rest of Africa, in particular Bevcan,” CEO André de Ruyter said in a statement to shareholders on Tuesday.
The overall group results for the six months under review benefited from a solid performance from the rest of Africa, as well as modest growth from some South African businesses, resulting in a 16% increase in group revenue to R8.7-billion.
Further, continued solid performances from Bevcan Angola and Bevcan Nigeria contributed to trading profit, which increased to 38%, from 27% in the prior comparable period.
However, the challenging South African trading environment, combined with the loss made by Nampak Glass, as well as cost increases associated with the ramp-up of recently commissioned projects, was pressuring trading margins.
As a result, group operating profit was down 9.2% to R904-million and the group trading margin at 9.8%. The group recorded net abnormal profits from continuing operations of R47.1-million, compared with a R100 000 net loss in the first half of 2014.
Nampak Glass experienced capacity constraints towards the latter part of the 2014 calender year, owing to the late commissioning of the newly installed third furnace, which occurred in peak season.
“The Nampak Glass issues are being addressed through the implementation of a comprehensive plan targeted at overcoming production inefficiencies and operational constraints, while we continued to deliver on our strategy to unlock value from our base business and to accelerate growth in the rest of Africa,” De Ruyter said.
He noted that the company’s Africa growth strategy would focus on metals and glass, the dominant packaging mediums for beverages. “We believe that these two packaging mediums have the potential for growth in excess of gross domestic product growth in the medium to long term,” he added.
The company was also evaluating potential glass opportunities in Angola, Nigeria and Ethiopia.