Packaging company Nampak reports that trading conditions in South Africa and Nigeria were good in the first quarter of its 2021 financial year, ended December 2020, with group revenue up 1% year-on-year.
Cost saving initiatives undertaken by the company during the 2020 financial year had yielded benefits and were complemented by higher export sales, which was reflected in the group trading profit improving by 18% relative to the first quarter of the 2020 financial year.
Nampak also reports a significant increase in operating profit for the year under review, partly as a result of the non-recurrence of adverse adjusting items.
With eased Covid-19 restrictions over the first quarter, Nampak’s metals division experienced healthy beverage can demand in South Africa and the export contracts secured by Bevcan South Africa were serviced as planned.
In addition, Nampak also reports that its funding covenants were complied with following the renegotiation of the group’s funding covenants during September 2020. These will be measured and reported on a quarterly basis for the duration of the current financial year.
Nampak says it has complied with these covenants for the first measurement period ended December 31, 2020.
ALCOHOL BAN IMPACT
Nampak notes that while certain categories within its paper and plastics businesses have lost sales during the most recent ban on alcohol sales, dispensing and distribution, the impact on Nampak’s metals businesses is expected to be much less than what was experienced during previous bans.
This is the result of demand for cans from Nampak’s major customers remaining largely unaffected during the first three weeks of the most recent ban.
South Africa’s third alcohol ban, announced on December 28, 2020, was subsequently lifted on February 2 − two weeks earlier than planned.
However, the company notes that the impact of the alcohol ban will still be visible in the second quarter of the 2021 financial year results, the extent of which depends on the level and pace of restocking by consumers following the lifting of the ban.
Nampak expects to release its interim results on or about May 28.