Nampak has declared a dividend of 98c for the year ended September 30 following an “exceptional” performance by the South African packaging group’s recently acquired Angola-based beverage-can manufacturing facility, which operated at above-design capacity for the majority of the year.

Trading profit from the group’s Africa-based operations grew 60% to R506-million year-on-year, which was largely attributed to the strong performance from the Angolan facility, as well as its Kenyan aluminium packaging operation, which benefitted from a good pineapple crop.

Group headline earnings a share from continuing operations rose by 8.2% from 201c in the 2012 financial year to 217.5c for the period under review. This was on the back of an 8% improvement in operating profit to R1.9-billion and a reduction in the effective tax rate to 22.1%.

The tax rate was favourably impacted by government incentives in Angola and Zambia, gains from the reconsolidation of the Zimbabwean businesses, the revaluation of the original interest in Norwegian packaging company Elopak and lower tax rates in jurisdictions outside South Africa.

In contrast to a stronger showing from the rest of the continent, trading profit from the South African operations decreased by 15%, while the margin declined to 8.4%.

This was partly owing to lower selling prices agreed in the metals and glass businesses to secure long-term supply contracts, as well as lower food can and glass bottle demand.

The margins in the South African paper, flexibles and plastics businesses also came under pressure owing to weak demand.

In the UK, trading profit increased by 14% to £11.2-million, with costs “well-controlled” and revenue marginally higher than last year. The increase in rand terms was 31%.

METALS AND GLASS

The company reported in a results statement on Thursday that there was “good” demand for beverage cans in all sectors, with the exception of carbonated soft drinks.

This division posted a trading profit of R970-million.

The increased volumes offset the impact of lower average selling prices agreed as part of long-term supply contracts, while the conversion of beverage cans from tinplate to aluminium progressed well, with a new aluminium manufacturing line installed and commissioned at Nampak’s Springs factory. 

Food can sales, in almost every category, were down, partly owing to weak consumer spending, while fish catches were affected by inclement weather off the Cape coast and fruit pickings were affected by industrial action and poor crop yields.

While the demand for aerosol and other cans remained moderate, the overall market for glass bottles declined and was impacted by increased exports of wine in bulk and the ongoing shift away from glass to cans and polyethylene-terephthalate bottles.

“Some beer bottle business was lost to a competitor and this, together with lower selling prices agreed as part of long-term supply agreements, contributed to a reduction in margin,” Nampak said.

PAPER AND FLEXIBLES

In South Africa, strong demand for corrugated boxes for agricultural products was more than offset by weak demand from the commercial sector, while export sales showed good growth. 

The group reported mixed demand in the flexible-packaging market, with a stronger performance by the food-related sector somewhat offset by weaker demand in other markets.

Trading profit for the year narrowed from R377-million for the 2012 fiscal period to R317-million for the period under review.

Volumes were flat in the early part of the year with a strong recovery evident in more recent months and, generally, lower demand for cement, sugar and milling paper sacks. 

“Weak consumer demand affected margins in all the businesses in this segment,” Nampak noted. 

PLASTICS

The group described the market for milk and juice in South Africa as “soft” and this, together with a move from fresh milk to long-life milk packed in cartons, was blamed for the narrowed sales of plastic bottles.

Meanwhile, the sales of metal wine closures in the country were similar to that of the prior year despite market-share gain, with the increased export of wine in bulk affecting demand.

Trading profit for the plastics segment contracted by 9.6% from R394-million in 2012 to R416-million in the 2013 fiscal year.

TISSUE

Despite growth in demand for one-ply toilet tissue, the market remained highly competitive and margins came under pressure despite operational performance improving, with cost savings being achieved in several areas. 

The tissue segment’s trading profit contracted by 6.3% from R111-million in the 2012 financial year to R104-million in 2013.

Nampak announced last month that André de Ruyter would take over as CEO of the group from April 1, 2014.