Zim dol­lar de­pre­ci­a­tion of more than 100% hits Nam­pak shares hard

Net de­val­u­a­tion loss of R1bn in Zim­babwe

Pretoria News - - NEWS - SANDILE MCHUNU [email protected]

SHARES in Africa’s largest pack­ag­ing man­u­fac­turer Nam­pak plum­meted nearly 15 per­cent yes­ter­day af­ter it said it had suf­fered a net de­val­u­a­tion loss of R1 bil­lion in Zim­babwe, due to a de­pre­ci­a­tion of the Zim­babwe dol­lar by more than 100 per­cent com­pared to the US dol­lar in the year to end Septem­ber.

The shares closed 15.95 per­cent lower at R5.27 on the JSE yes­ter­day.

The de­val­u­a­tion of the Zim­bab­wean dol­lar led to Nam­pak re­port­ing an 84 per­cent de­cline in op­er­at­ing profit to R254 mil­lion and a profit be­fore tax of R6m com­pared to a profit of R1.36bn re­ported last year.

Out­go­ing chief ex­ec­u­tive An­dré de Ruyter said the hy­per-in­fla­tion­ary en­vi­ron­ment in Zim­babwe, cou­pled with the rapid de­pre­ci­a­tion of the Zim­babwe dol­lar by more than 100 per­cent in just nine months, has cre­ated an en­vi­ron­ment where the re­main­ing cash bal­ances had to be writ­ten down to re­flect the new re­al­ity of a much weaker cur­rency.

“We put in place a hedg­ing agree­ment with the Re­serve Bank of Zim­babwe to pro­tect some R800m of the cash bal­ances, but took a pru­dent view on this hedge and have pro­vided for an ex­pected loss on this amount of 85 per­cent. If we re­cover more than this, share­hold­ers will ben­e­fit in fu­ture years,” De Ruyter said.

Nam­pak also faced head­winds in An­gola, with the de­val­u­a­tion of the kwanza hit­ting its prof­its by R212m from for­eign ex­change rate move­ments in that coun­try.

In 2019 the group put its fo­cus on oper­a­tional efficienci­es, cost con­tain­ment, right-siz­ing of di­vi­sions and dis­posal of non-core and un­prof­itable busi­nesses.

As a re­sult, it ex­pected its bal­ance sheet to im­prove go­ing for­ward as it fore­casts that the sales of Nam­pak

Glass and Nam­pak Nige­ria Car­tons to raise a to­tal of R1.9bn, which will be used to re­duce its debt.

Rev­enue de­clined by 8 per­cent to R14.6bn while head­line earn­ings per share fell by 69 per­cent to 54.1 cents a share and head­line earn­ings de­clined by 69 per­cent to R349m.

Its trad­ing profit de­clined by 21 per­cent to R1.6bn, due to weaker per­for­mance in me­tals and pa­per di­vi­sions, while softer de­mand at Div­food SA and Bev­can An­gola im­pacted over­all prof­itabil­ity.

The board de­cided not to re­sume div­i­dends un­til debt lev­els were sig­nif­i­cantly reduced. Its core Bev­can busi­ness per­formed well in Nige­ria, with dou­ble digit mar­ket share gains and in­creased sales vol­umes.

In South Africa, Nam­pak man­aged to re­tain a mar­ket share in ex­cess of 80 per­cent in the bev­er­age can mar­ket, de­spite the en­try of two new com­peti­tors. “Not only was Bev­can SA able to de­liver stable prof­its for the year thanks to cost sav­ing and ef­fi­ciency gains, but we also suc­cess­fully de­vel­oped new mar­ket cat­e­gories in wine, wa­ter and craft beer,” De Ruyter said.


A FORK­LIFT driver on duty at Nam­pak in Ross­lyn in Pre­to­ria. |

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