Nampak optimistic about market conditions for the months ahead

30th September 2020 By: Tasneem Bulbulia - Creamer Media Reporter

JSE-listed Nampak Group says the 11 months from October 1, 2019, to August 31, were characterised by a weak economic climate and pressure on consumers’ disposable income.

This was further exacerbated by an even more challenging period from March as lockdown measures were implemented by governments in most sectors to combat the spread of Covid-19 .

A ban on alcohol sales and restrictions on social events impacted negatively on overall volumes, but significant progress was made in reducing dollar-denominated debt, defending Nampak’s market share and developing new growth opportunities, the group notes.

A number of its sites continued to operate to the extent allowed by regulations, and Nampak says it acted swiftly in implementing safety measures to mitigate the impact of Covid-19 as best as possible.

To date, Nampak has experienced 285 Covid-19 infections across its facilities, with 274 employees having fully recovered. Two employees passed away as a result of the virus.

The pandemic resulted in reduced economic activity across all geographies and adversely impacted on the group’s profitability.

Trading is now gradually returning to normal as economic activity and consumer consumption patterns recover, Nampak notes.

It has renewed two substantial supply contracts with multinational customers for the supply of beverage cans for the next three years.

Further, it has secured two material contracts to supply beverage cans to new large export customers. The bulk of these secured volumes will be delivered throughout the 2021 financial year and will boost the use of the South African beverage can facilities, enthuses Nampak.

This is expected to contribute to improved earnings for the 2021 financial year and contribute significantly to closing the gap caused by the impact of Covid-19.

The group is reviewing its portfolio and its capital and funding structures. Focus continues to be on margin improvement activities and cash generation.

Given the impact of Covid-19 on normal demand patterns, the optimisation of working capital and conservative capital expenditure have been key focus areas. As a result, the group has continued to be cash positive throughout the period impacted by the pandemic.

In line with Nampak’s intention to reduce dollar-denominated debt, the R1.4-billion in net proceeds from the disposal of its Glass business and $16-million from the sale of Cartons Nigeria were used to reduce this debt by $100-million.

Nampak expects to publish its results for the financial year to September 30 on or about December 1.