All packed up but nowhere to go
PACKAGING COMPANIES may not be the economic leading indicators they once were. The entire environment is currently abnormal. But the packaging groups – largely represented on the JSE by Nampak and Astrapak – are probably still the best leading indicators we have. Recent performance and financial results seem to indicate a recovery in retail and consumer spending is still a long way off.
Nampak released interim results just over a week ago. Volumes in its main market – South Africa – were steady but flat, with a drop off in the second quarter. Looking forward, new CEO Andrew Marshall said current “difficult economic conditions” were expected to continue in all Nampak’s markets. As a broad-based supplier of packaging in metal, glass, plastic and paper, Nampak’s clients come from virtually every industry that uses packaging.
Astrapak is more focused on plastic packaging. But its clients also range across all the consumer sectors, encompassing food, beverages, personal care, pharmaceuticals, agriculture, industrial and retail markets. Its view for the future – in full-year results to end-February – is that “difficult trading conditions are expected to remain until at least the second half of the 2009 calendar year”.
That sounds a little more encouraging but still indicates both companies see no clear signs of recovery soon.