Growing competition eases NamPak volumes
PAPER packaging material producer, NamPack Zimbabwe, continues to face volume reduction across all its business units due to competition in the regional market.
In a trading update for the third quarter and nine months period ended June 30, 2020, the manufacturing concern said despite foreign currency availability having improved due to the forex auction trading system, shortage remains the company’s major concern.
“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.
“Volume reduction continued across all sectors of the business and margins were squeezed due to competition in the market.
“However, demand remained positive across most product portfolios and all units traded profitably,” said the manufacturing concern.
The quarter under review, Nampack said, continued to be dominated by the Covid-19 pandemic, which impacted on the company’s operations due to ongoing lockdowns.
The firm remains operational as it was approved as an essential industry for manufacturing packaging in support of the tobacco, food and beverage, pharmaceutical and detergent and sanitising industries.
“The economy continued to suffer from the scarcity of foreign currency. The introduction of the foreign exchange auction system has improved availability of United States dollars at an official exchange rate,” said the firm. “Inflation, temporarily at a reduced rate of increase, will continue rising against the value depreciation of the Zimbabwe dollar.”
The company raised concern over fuel shortages, which eased towards the end of the previous quarter, but now appear to be and resurfacing.
“Power supplies are steadier, which have assisted production schedules. The revenue for the third quarter under review was 522 percent ahead of prior year quarter in historical terms as a result of inflation assisted prices.
“The cumulative revenue for the nine months to 30 June 2020 was 644 percent ahead of the prior year period in historical terms,” said Nampack.
During the quarter under review, the firm said its business unit, Hunyani Paper and Packaging recorded 36 percent decline in volumes while in the nine months period volumes decreased by 31 percent compared to prior year.
The decline in the export market was at 56 percent largely due to competition in the regional tobacco market.
“Volumes in the commercial segment were 13 percent below the prior year’s nine-month period, affected in the third quarter by depressed demand due to the Covid-19 lockdown restrictions.”
The group’s plastic and metals segment, Mega Pak, recorded a 12 percent decrease in the quarter and 25 percent 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.
“Raw material sourcing remained of concern. CarnaudMetalbox, volumes were down by 48 percent and 36 percent respectively, for the quarter and the nine months of the financial year compared to the corresponding periods in the previous financial year,” said Nampack.