JSE-listed Nampak achieved an 8% increase in headline earnings per share (HEPS) to 111.1c and a 15% increase in earnings per share to 120.8c for the half-year ended March 31.

Speaking during a presentation of the company’s results, CEO Andre de Ruyter said the company continued to focus on managing and improving controllable aspects such as costs, asset performance and processes, resulting in R70-million in savings for the period.

“Capital expenditure of R470-million was tightly controlled and 49% lower, with significantly improved project management capability,” he said, highlighting that net profit had increased by 41% during the period.

He pointed out that the asset recapitalisation programme in South Africa was almost complete and was already contributing to improved efficiencies and competitiveness.
 
“The substantially strengthened balance sheet has significantly enhanced our ability to be resilient during continued macroeconomic uncertainty. Net gearing of 51% is within our target range and short-term liquidity ratios are strong,” he said.

De Ruyter added that adequate funding facilities were available internationally and locally, and the group remained comfortably within its debt covenants. 

Group revenue of R9.3-billion was 1% lower, despite a 10% stronger average rand/dollar exchange rate that negatively impacted on the translation of contributions from foreign operations.

Strong revenue growth of 11% was achieved by the metals division, owing to robust beverage can sales in Angola and improved volumes from Bevcan South Africa.

This was offset by a poor performance from the UK plastics business, where a turnaround plan is being led by a new management team. Most markets in the paper division had lower demand, while the glass division delivered subdued performance, owing to softer demand in the South African market. 
 
The group trading margin rose to 11.9%, driven by stronger trading profit from the metals division.

Operating profit improved by 30% to R1.1-billion, assisted by net abnormal gains of R24-million compared to net abnormal losses of R119-million in the prior year.  
 
The net working capital cycle absorbed R912-million, mainly owing to R223-million invested in inventory because of higher volumes in Angola, compared with a release of R169-million in the prior year.

South Africa experienced volatile exchange rates, slow growth rates and lower consumer demand on the back of low commodity prices and heightened political uncertainty.

“Despite these conditions, revenue and trading profit increased by 3% and 7% respectively.  The region’s contribution to trading profit was 45%.” 
 
The rest of Africa recorded sales of R2.9-billion, up 5%, while trading profit rose by 32%. The rest of Africa now contributes 55% to trading profit, up from 47% in 2016. 

“Because of liquidity constraints in Nigeria and Angola, cash extraction from those countries has been a key focus area where we have been able to successfully reduce our exposure through active hedging programmes,” he said.

“Further progress has been made in the extraction of cash from Nigeria with at least $54-million in cash extraction expected to be achieved before the financial year-end, further strengthening the group’s ability to fund the rest of Africa growth markets.”

Cash held in Nigeria and Angola increased to R2.4-billion owing to strong cash generation. The combined cash extraction rate from these countries improved to 80%, and 61% of cash was hedged as at March 31. 
 
In view of the current risks and challenges, the company has not declared an interim ordinary dividend, rather focusing efforts on conserving cash.