Nampak reports a strong Q2 performance

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  • Revenue increased by 19%
  • The Group posted a surge in volumes across all segments
  • The 75% increase in wages within the packaging industry will impact on pricing structures.

HARARE – Nampak Zimbabwe Limited reported a surge in revenue by 19% for Q2FY21 compared to the prior comparative period owing to the increase in sales volumes, despite pressure on the availability of raw materials.

The Group also had a cash holding of ZWL$434 million at the end of the second quarter, and highlighted that it will be applied to stockholding and settlement of trade payables.

In a trading update, Nampak which specialises in manufacturing and market packaging products which include paper, plastic, and metal, said sales volumes at Hunyani Corrugated Division for the second quarter were up compared to the prior quarter by 21% whereas volumes in the commercial sector grew by 33% on prior year led by improved demand and customer recovery.

The tobacco sector was 2% ahead of the prior year owing to some early season requirements that came through in the second quarter, however tobacco wrap sales were down in line with the lower tobacco crop

The Cartons, Labels and Sacks Division sales volumes for the second quarter were up on prior year by 8%, due to sales of SO bags to the millers and cartons to Nestle on the back of the higher local wheat crop.

On the plastics segment Megapak reported a sales volumes growth by 46% for the same period under review owing to the increased demand in the preforms market.

Meanwhile improved volumes continued in beverage manufacturers and exports into the Democratic Republic of Congo remained lower as regional economies were affected by the COVID-19 impacts.

CarnaudMetalbox had its sales volume surge during the quarter to 10% compared to the previous quarter. Metal volumes were up 22% with food can and crowns leading the recovery However, the Group highlighted that the shortage of tinplate is likely to affect sales in the next quarter.

Plastics performance was mixed, with higher HDPE bottle volumes 15% ahead of the previous quarter being off-set by reduced injection closure volumes which were 16% below the prior period.

In the Group’s outlook the managing director JP Van Gend highlighted that the recent award of a 75% increase in wages within the packaging industry will impact on pricing structures and quite possibly on overall demand.

“Export performance can expect some reduction as our local cost base rises and the increase in the export retention to 40% further erodes our ability to obtain sufficient” he said.

Equity Axis News                                                                                          

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