Nampak raises red flag on forex shortages, volumes slide in Q3 2020

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  • Group Managing Director John Van Gend said, “The shortage of sufficient foreign currency for importing raw materials remained the Group’s main concern…”
  • Volumes tumble across all segments
  • The Group anticipates that the disruptive impact of Covid-19 will be felt for some considerable time

Harare – Nampak Zimbabwe Limited has lamented the biting foreign currency shortages in Zimbabwe which is making it difficult to import essential raw materials for production for most business operations, but noted that the recent introduction of the foreign exchange auction system has improved availability of United States Dollars at an official exchange rate.

In a statement accompanying the Group’s trading update for the third quarter and nine (9) months ended 30 June 2030, the Group’s Managing Director John Van Gend said, “The shortage of sufficient foreign currency for importing raw materials remained the Group’s main concern, especially in respect of paper for conversion into corrugated boxes for the commercial and tobacco sectors.”

Nampak manufactures and markets packaging products which includes paper, plastic and metal packaging. It also has interests in leasing biological assets and a timber processing plant.

Despite registering a 522% revenue increase ahead of prior year in historical terms as a result of inflation assisted prices, the Group recorded volume reduction across all sectors of the business highlighting that “margins were squeezed due to competition in the market.”

“However, demand remained positive across most product portfolios and all units traded profitably”, Gend said.

Hunyani Paper and Packaging volumes were down by 36% for the quarter and 31% for the nine months compared to the prior year periods while volumes in the commercial segment were 13% below the prior year nine-month period, affected in the third quarter by depressed demand due to the Covid-19 lockdown restrictions.

Under the plastic and metal segment, Mega Pak’s volumes declined by 12% in the quarter and by 25% for the nine months, mainly due to continuing contraction in consumer demand in the beverage sector.

“There was a partial recovery in the third quarter due to higher volumes for preforms and closures driven by indirect exports,” Mr Gend said.

“Raw material sourcing remained of concern.”

Likewise, volumes at CarnaudMetalbox were down by 48% and by 36% respectively, for the quarter and the 9 months of the financial year compared to the corresponding periods in the previous financial year.

Mr Gend highlighted that the metals volumes are being impacted negatively by the shortage of tinplate.

Commenting on the effects of Covid-19 on the business he said that all units have implemented stringent sanitising measures in accordance with government policy adding that “It is anticipated that the disruptive effects of the pandemic will be felt for some considerable time.”

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