Forex shortages weigh down Nampak

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PACKAGING products manufacturer Nampak Zimbabwe says its performance during the year ended September 30, 2018 was constrained by foreign currency shortages.
The country has persistently run trade deficits since dollarisation in 2009, plunging the economy into an intensifying foreign currency shortage that has threatened the viability of businesses.
“Generally, the group’s performance could have been significantly better, but was constrained as foreign currency availability remained well below the group’s requirements,” the company said in a comment accompanying its financial statements for the year ended September 30, 2018.
“The difficulties currently being experienced in the economy have made business more challenging than at any time in the recent past. Domestic inflationary pressures are building up and are likely to erode some of the consumer gains made in the past year.
“Unless appropriate policies are implemented to resolve the underlying economic problems, it is possible that in the year ahead there may be a contraction of the economy, which could impact on manufacturing output,” the company said.
During the period under review, the crisis intensified, with the industrial sector facing serious difficulties as a result of the acute foreign exchange constraints that impacted on raw material procurement.
A consequence of the lack of foreign exchange was that the company’s South Africa shareholders reviewed, and subsequently limited, “their support at the commencement of the third quarter, thereby curtailing their escalating exposure”.
Nevertheless, sales to the group’s customer base recovered considerably, as demand improved during the year, which contributed to an enhanced performance.
The company reported a profit after tax of $9,2 million, up from $4,9 million in the prior comparable period, an increase of 88 percent.
“Sales to the group’s customer base recovered considerably, as demand improved during the year, which contributed to an enhanced performance,” the company said in a comment accompanying its financial statements.
Revenue increased by 21,3 percent during the year, from $96,3 million to $116,8 million.
The group’s machinery company, CarnaudMetalbox’s volumes and net revenue improved compared to the prior year as “demand recovered, particularly from the beverages sector, resulting in operating profit being substantially up on the prior year”.
Hunyani’s volumes and net revenue for the operating divisions improved from the prior year as demand for commercial packaging continued to rise.
“Performance in the tobacco carton sector was solid. The resultant operating profit was substantially ahead of the prior year, spurred by higher volumes and overhead cost containment,” the company said.
Mega Pak’s volumes and net revenues were significantly up on prior year, led by a recovery in demand from major customers, growth in exports to the Democratic Republic of Congo and capacity enhancements with operating profit well ahead of the prior year.
The group’s tissue paper division, Softex also traded profitably.
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