Africa sales boost Nampak profit
NAMPAK saw revenue grow 10% and trading profit rise 11% in the interim period to March. Sales in Africa led the charge with SA rising 4%, the rest of Africa 71% and Europe 16%.
NAMPAK, Africa’s largest packaging manufacturer, saw revenue grow 10% and trading profit rise 11% in the interim period to March, with sales in the rest of the continent leading the charge.
Sales in SA rose 4%, the rest of Africa by 71%, and Europe by 16%, as its overall trading margin notched up one basis point to 10,8%.
Nampak yesterday said this was due to improved results from its diversified can, corrugated, plastics and African operations, with African trading profit up from R89m to R142m, or 15% of total profit.
“I think we are happy with the result,” CEO Andrew Marshall said yesterday. But he said operating conditions in SA and Europe had been tough. “Certainly Africa is what’s driving the numbers at present, with the others (SA and Europe) holding their own.”
He said unit volumes in Europe were pretty flat, and that SA was “nothing to write home about”.
“Both SA and the UK are very difficult markets at present,” he said, with volumes in SA hit by imports of canned food products.
However, profits from the rest of Africa were up 60%, despite Nigerian sales being hit by a national strike over fuel prices.
Also, the group’s Angola beverages can plant had more than doubled output in a year to about 50million cans a month.
Headline earnings per share from continuing operations were up 13%; return on net assets 22% better; and the dividend per share was up 19%.
Operating profit from continuing operations increased by 8%, but was affected by a loss of R53m on the fair value of financial instruments due to exchange rate fluctuations.
“The highlight of the results was the strong performance of the African operations, on the back of contributions from their new beverage can plant in Angola, as well as solid growth from their Zambian business,” Jihad Jhaveri, equity analyst at Kagiso Asset Management, said yesterday.
“We see profits from Africa continuing to grow strongly from better margins in Angola, and as an attractive pipeline of new projects starts to come through,” he said.
Mr Jhaveri said the rest of the group’s operations had “performed satisfactorily”, and the problematic South African corrugated paper business was doing better.
Nampak is the biggest supplier of plastic bottles to the dairy industry in the UK, while recycling of all types of used packaging is a core activity.
Net finance costs shot up 37% to R65m as a result of higher debt, mainly on the acquisition of the remaining 50% of the Nampak Glass business, which pushed net debt to R1,5bn at the end of March, from R0, 6bn at the end of September.
Mr Marshall said the group saw glass bottles and containers as part of its core business, and buying all of Nampak Glass would help expand group operations in Africa.