• Nampak Zimbabwe aims to increase capacity with strategic asset purchase.
  • Impressive sales volume and revenue growth demonstrate Nampak's resilience.
  • Nampak Zimbabwe focuses on operational efficiency and increased profitability.

Nampak Zimbabwe, a leading manufacturer of plastic packaging products, is aiming to increase its capacity with the acquisition of an eight-colour printer for self-opening paper bags from Bullpak. This move comes as part of Nampak's efforts to optimize capital expenditure, tap into growth opportunities and safeguard against cash devaluation (Zimdollar)

Despite challenges such as power disruptions and raw material shortages, Nampak Zimbabwe achieved a modest 2% growth in overall sales volumes during the six-month period ended 31 March 2023. Notably, the company experienced a significant 56% increase in revenue, driven by a surge in demand for tobacco cases and closures. This impressive growth in sales volume and revenue demonstrates Nampak's resilience and ability to capitalize on market opportunities.

Nampak Zimbabwe has consistently focused on improving operational efficiency, resulting in significant improvements in overall equipment effectiveness. Through process optimization, improved maintenance practices, and role clarifications, the company has successfully increased productivity and reduced downtime. These efforts have contributed to the remarkable upswing in operating profit by a staggering 94% compared to the previous year.

The acquisition of the eight-colour printer for self-opening paper bags from Bullpak is a strategic move by Nampak Zimbabwe to strengthen its position in the market. By expanding its product portfolio and investing in cutting-edge technologies, Nampak Zimbabwe aims to enhance operational efficiency and customer experience. The new production line will enable the company to meet the growing demand for self-opening paper bags and cater to the evolving needs of its customers.

The acquisition of the state-of-the-art eight-colour printer signifies Nampak's commitment to optimizing its production capacity and efficiency. By integrating this advanced technology into its operations, the company will streamline its manufacturing processes and increase output. The new printer will enable Nampak Zimbabwe to produce self-opening paper bags with greater precision, speed, and quality, meeting the evolving needs of its customers in the local and export tobacco markets.

Nampak Zimbabwe has allocated a substantial amount toward capital expenditure, with a focus on addressing power supply issues and enhancing operational efficiency at its Megapak factory. The investment in a new generator and other measures to improve operational efficiency will enable Nampak Zimbabwe to mitigate the negative impact of power outages and increase production capacity. This strategic investment demonstrates the company's commitment to long-term sustainability and growth.

The plastic packaging industry is witnessing a shift towards sustainable and eco-friendly products, such as biodegradable plastics. By leveraging its strong brand reputation and extensive distribution network, Nampak Zimbabwe is well-positioned to introduce innovative products that align with these industry trends. Additionally, the government's target of exporting 300 million kilograms of tobacco crops presents a significant opportunity for Nampak Zimbabwe to expand its production of tobacco-based cases and closures.

Nampak Zimbabwe's acquisition of a new production line from Bullpak represents a strategic move to optimize capital expenditure, tap into growth opportunities, and enhance operational efficiency. The company's positive sales volume and revenue growth, along with its focus on improving operational efficiency, position it for long-term success. By aligning with industry trends and government initiatives, Nampak Zimbabwe is well-equipped to meet the evolving needs of its customers and capitalize on market opportunities. As the company continues to expand and invest in cutting-edge technologies, it remains an attractive prospect for investors seeking sustainable and innovative solutions in the plastic packaging industry.

However, the company’s future hangs on the balance following a business review by its parent company, Nampak South Africa. The parent is implementing a debt restructuring and turnaround programme which include the securing of a long-term debt funding package. From the exercise the parent aims to reposition the group to focus on its core business and to put in place a robust and sustainable capital structure.

As part of the program the group aims to achieve an overall assessment of costs within the group; the winding down of unprofitable operations outside of South Africa where no opportunities exist for disposals as going concerns; the sale of non-core assets, divisions and/or subsidiaries; and the completion of a successful rights offer. Apart from Zimbabwe operations, Nampak operates in 8 other countries.

-Equity Axis Zim