- Megapak experienced 12-hr-power blackouts
- CMB had no power from 18 December
- Production at both units were curtailed
- However, revenue remained firmer
The graph below shows the Company’s segment performance in %
Harare- ZSE-listed manufacturer and marketer of packaging products, Nampak Zimbabwe Limited has experienced a rolling 12-hour load-shedding at Megapak while CMB had no electricity supply since 18 December 2022 for the first quarter ended 31 December 2022.
This weighed down the Company’s production efficiency resulting in the quarterly volumes registering a marginal increase of 3.3%, the least since the advent of the COVID-19 pandemic in 2020 when volumes decreased across all sectors.
"The electricity supply which deteriorated adversely during the quarter curtailed our ability to fully meet customer requirements,” the Company said in a trading update.
The Company’s operations have backup generators, but they are not enough to cover the entire plant at Megapak and CMB. Further, the generators are not designed to operate continuously 24/7.
Zimbabwe has been experiencing electricity challenges since the post-COVID-19 period to date, due to the excessive reliance on the ageing power plants at Hwange Power Station and Kariba Power Station amid drought-related summer seasons.
It seems like a lot of politicking is involved within the energy sector as the commissioning of Hwange’s unit 7 which was due on the 31st of January is still hanging in the air. There is a lack of transparency regarding the whatabouts surrounding the project.
Against this, it is crystal clear that the installation of unit 8 will also miss the target.
Therefore, there is a need for companies to invest in alternative energy sources such as solar systems which can operate 24/7 to increase production. The belief that ZESA will provide sufficient power is believing that the blind will lead on the path to success.
Caledonia has already installed a 12MW solar project that is supplying 27% of its power demand at Blanket Mine while RioZim is still courting investors.
The Company’s revenue, however, grew by 60% resulting in ZWL3.131 million in trading profit.
On segment performance, volumes at Hunyani increased by 13.6% courtesy of improved tobacco case orders in the region and some carry-over of late-season orders from local tobacco merchants from the previous financial year.
However, commercial sales declined by 4% due to continued challenges with paper supplies at SAPPI following a problematic start-up after their shut at the end of the last financial year.
Cartons, Labels and Sack divisions’ sales volumes plummeted by 15% due to the late arrival of paper and tobacco rolls and tea sacks and the delayed orders from flour millers.
Megapak volumes went down by 10% due to recurrent power cuts which affected operations.
Carnaudmetalbox’s sales marginally grew by 1% while metal volumes were down due to power outages experienced during the last two weeks of December, hence, the unit was only able to operate at 50% capacity producing only plastic products.
Outlook
Going forward, the Company predicts the environment will remain tough, hurdled by usurious borrowing costs and power outages.
Nampak is the first Company to lament the 150% bank policy rates after they were reduced by 50 percentage points earlier in the first week of February 2023.
High-interest rates curtail ZWL borrowings hence, productive borrowing for investment purposes and consumers' purchasing powers are derailed.
The Company needs to invest more in solar energy as the power situation in Zimbabwe remains clouded.
Equity Axis News
