Harare – Zimbabwe Stock Exchange listed packaging company, NamPak Zimbabwe (NamPak) revenue for the year ended September 30, 2018 amounted to $116.8 million compared to $96.3 million the prior year which is an increase of 21.3 percent driven by both volume growth and tight cost control.
As a result operating profit increased by 91 percent to close at $14.5 million compared to $7.6 million last year.
“Tight control over inventory and trade receivables, combined with a significant increase in trade payables primarily due to committed inventory purchases funded by the controlling shareholder on a trade loan basis contributed to year-end cash balances accumulating to $84.5 million compared to $48.2 million in 2017.”
The Company said the industrial sector continued to face serious difficulties as a result of the acute foreign exchange constraints which impacted on raw material procurement.
“Generally, the Group’s performance could have been significantly better, but, was constrained as foreign exchange availability remained well below the Group’s requirements.”
Foreign currency shortages has negatively impacted on performance of major listed Companies including Delta Beverages and miner RioZim Limited.
RioZim Limited involuntarily stopped operations at its three mines namely Cam and Motor Mine, Dalny Mine and Renco Mine citing failure by the Reserve Bank of Zimbabwe to release sufficient foreign currency to continue its operations.
However, the miner resumed operations after talks with the central in regards to foreign currency allocations but is demanding $92 million from the RBZ in a lawsuit brought to force the central bank to pay for more of its gold purchases from the company in U.S. dollars, according to court documents.
Beverages giant, Delta Corporation Limited reported in its financials that foreign currency shortages continue to have a knock on effect on its business especially packaging material, although earnings were positive in the first quarter to June 30, 2018.
The foreign currency shortages compromised the beverages maker’s ability to service its market, together with other companies that need to procure basic raw materials.
The soft drinks category in particular was adversely affected by the challenges in securing raw materials, leading to extended periods of production stoppages and out of stock situations.
In Zimbabwe, the sorghum beer volume fell 5 percent due to shortages of packaging materials for the Chibuku Super, although product supply improved by end of the quarter.
Indications are that Delta’s associates, African Distillers Limited, Schweppes Zimbabwe Limited and Nampak Zimbabwe were all constrained by foreign currency shortages to import essential raw materials especially for packaging during the financial year 2017.
Nevertheless, NamPak Zimbabwe said sales to the Group’s customer base recovered considerably, as demand improved during the year, which contributed to an enhanced performance.
NamPak also noted that the tobacco season outperformed last year and this also contributed to the good results.
However, it said a consequence of the lack of foreign exchange was that the South African shareholder reviewed, and subsequently limited, their support at the commencement of the third quarter thereby curtailing their escalating exposure.
Market watchers are saying the growth impetus provided by the new administration is being weighed down by the shortage of foreign currency for the importing of critical raw materials for production and the late onset of rains during the 2017-18 agricultural season.
Zimbabwe abandoned its currency in 2009, after the International Monetary Fund (IMF) estimated inflation had topped 500-billion percent, and has mainly used the dollar since then. In 2016, it introduced bond notes as a form of currency.
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