Nampak focuses on cost containment

LISTED packaging products maker Nampak Holdings Limited says the company will continue its focus on cost control and margin preservation in order to offset the challenges obtaining in the operating environment.

The 2023 trading year saw a lot of complexities in the operating environment particularly around currency, inflation and power shortages.

For the current financial year, the operating environment is characterised by currency volatility, low disposable incomes, inflationary pressures and erratic utilities supplies, according to Nampak.

Although the company has noted some volume growth, and improved demand despite these challenges, the adverse impacts of the projected El Nino weather phenomenon which could impact the agricultural season is also expected to weigh on performance.

Nampak has also lamented the uncertain tax positions which impact on their business compounded with currency changes effected since 2018.

“These changes created some uncertainties in the tax treatment of transactions for tax purposes due to the absence of immediate and clear guidelines and transitional measures,” said the Group.

Nampak also highlighted that the Zimbabwe Revenue Authority (ZIMRA) has made some income tax assessments and levied penalties and interest relating to the provisions and reversals of the legacy debts related transactions raised at one of the group’s entities for the period 2019 to 2020.

According to the company, the local currency equivalent of the disputed assessments including interest and penalties amount to $6,66 billion as at September 30, 2023.

“These assessments have been challenged and objected through the relevant ZIMRA levels of authority in line with the legal provisions.

“Based on legal advice received to date, the board is of the view that there is no liability and that ZIMRA will reverse the assessments once the ongoing engagements and clarifications are concluded,” said Nampak.

Meanwhile, the group achieved sales for the year in inflation adjusted terms of $573,78 billion for FY23 compared to $394,15 billion recorded during the prior year period.

Trading income rose to $114,56 billion from $83,47 billion in the prior year. Profit before tax almost doubled to $118,32 billion from prior year’s $59,37 billion. The profit before tax takes into account other material income of $71,19 billion and a net monetary loss on hyperinflation of $67,31 billion while other income, in the main, comprises exchange gains on foreign denominated debtors and cash balances.

The comprehensive profit attributable to shareholders more than doubled to $51,55 billion from $21,3 billion. Going forward, the company is also looking at implementing some significant capital projects currently being reviewed by management subject to availability of funds.

During the prior year, the group committed $13,14 billion focused mainly on projects to increase capacity and improve plant services.