NAMPAK REPORTS IMPROVED PROFITS :

PAPER and packaging group Nampak Zimbabwe’s profit for the six months to September 30, 2017 jumped 13,5 percent to $4,9 million from $4,3 million in the prior period despite foreign exchange challenges that affected business.

Sales revenue for the half year marginally increased by 1,1 percent to $96,3 million on mixed performance across units.

Although the period was characterised by an upturn in both agriculture and mining sectors, the industrial sector continued to face challenges due to foreign currency shortages, which subsequently had a knock on effect on the group’s business.

“Procurement of essential raw materials came under increasing pressure with a concomitant reduction in industrial productive capacity utilization.

“Foreign exchange availability remained well below the group’s requirements despite constant engagement with our banking partners and the Reserve Bank of Zimbabwe (RBZ),” said Nampak in statement accompanying the group’s financial results.

Operating profit came in at $7,6 million which was 11,7 percent above prior year comparable period.

Improved profitability, combined with cost containment and tight controls over working capital gave Nampak an improved cash holding throughout the year.

The group had an accumulation of cash balances of $48 million due to inability to settle foreign liabilities on time.

For the period under review, total expenditure amounted to $2,8 million which was incurred mainly for plant upgrades. This included new moulds and injection moulding at CarnaudMetalBox and Mega Pak as well as minor equipment at Hunyani.

At CarnaudMetalBox, revenue and volumes declined against the prior year on depressed demand as a result of a cool summer and trading income was marginally down on prior year.

Hunyani’s volumes and net revenue across the operating division improved from the prior year with an upturn in demand for commercial packaging arising from import restrictions implemented under the Statutory Instrument 64 and solid performance in tobacco carton sector.

Operating profit at Mega Pak was below prior year but Softex Tissue products traded profitably. Nampak did not declare a dividend as it looks at settling outstanding foreign creditors, reduce debt and fund its future capital expenditure projects.