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Business Writer
PACKAGING products supplier Nampak Zimbabwe says the bulk of its foreign currency requirements have been met through the Reserve Bank of Zimbabwe (RBZ) auction system, which has been complemented by US dollar sales.
The RBZ introduced the auction system in June last year with the platform quickly becoming the preferred source of forex for registered operators. Since its inception, the auction has disbursed about US$1.7 billion for key imports.
The central bank contends the auction system has been instrumental in establishing prices and the exchange rate, which triggered inflation down spiral, helping to create a conducive environment that is anchoring projected growth of 7.8 percent this year.
Nampak, a Zimbabwe Stock Exchange (ZSE) listed counter, produces a diverse range of plastic products, which include crates, drums, tanks, bottles and closures for the local market and exports to SADC and COMESA countries such as Mozambique, Zambia and Malawi.
John Van Gend, the company’s managing director, said the trading quarter to June 30, 2021, witnessed an increase in trading volumes for the group, as Covid -19 restrictions were relaxed.
“…although still inadequate for the group’s operations as a whole, foreign currency was more available through the auction system and was supplemented by additional amounts sourced from customers,” he said.
He noted that the foreign currency limitations and delays in disbursements continued to have the effect of creating imbalances within the supply and customer delivery chain.
For the period under review, the group’s revenue was 37 percent ahead of the prior year quarter in inflation adjusted terms and 234 percent in historical terms.Van Gend said that cumulative revenue in inflation adjusted terms for the nine month period was 26 percent ahead of the prior year period and 336 percent above the same period in historical terms.
“This was due to growth in sales volumes and adjustment of selling prices to reflect the economic trends,” he said, adding that the availability of raw materials remained challenging, but Group units traded profitably in the period under review.
Van Gend said the group’s net working capital remained positive and the company had a cash holding of $528 million at the end of the third quarter, which is being used to reinvest in raw materials and settlement of trade payables.
In terms of segmental performance, Hunyani Paper and Packaging volumes were 38 percent up for the quarter and 23 percent ahead for the nine months compared to the prior year period.
Van Gend said volumes in the commercial sector grew by 63 percent in the previous nine month period led by improved demand and ongoing customer recovery.
“The tobacco sector was 4 percent below the prior year nine month period due to the lower tobacco crop last year and the delayed start to packing this year. The year to date decline in the export market was 19 percent due to Covid-19 impacts in regional markets,” he said.
At Mega Pak, volumes increased by 60 percent in the quarter and by 59 percent for the nine months due to increased demand across all areas of the business.
“The improved volumes continued in the beverage manufacturing sector, which contributed to increased preforms volumes,” Mr Van Gend noted.
He indicated that large injection molding also continued to perform well while exports into the region remained subdued as regional economies were affected by the pandemic.
CarnaudMetalbox volumes grew by 69 percent and 23 percent for the quarter and the nine months respectively, compared to the previous financial periods.
The managing director said the cumulative metal volumes were up 7 percent with food can and crowns leading the recovery despite a shortage of tinplate.
“Plastics performance was mixed, with higher HDPE bottle volumes 52 percent ahead of the previous year being off-set by a decline in injection closure volumes, which were 8 percent below the prior period,” Van Gend said.
He noted that capital expenditure of $128 million spent for the period under review, relates mainly to projects carried forward from the previous financial year. He added that various projects remain under consideration subject to availability of foreign exchange.
In the Forestry Estates, Van Gend said the company continues to engage with the relevant Authorities to regain effective control over its Estates.
“It remains our intention to rehabilitate them for timber and agricultural purposes in line with the Government’s declared thrust in this direction. Progress has been made at Maganga estate where our eviction notice was implemented, with families concerned being resettled in another part of the estate,” he said.
Van Gend said an agreement was reached with ART Holdings Limited for purchase of the entire shareholding of the group’s 50 percent share in Softex Tissue Products (Private) Limited.
He said payments for the sale have commenced and various regulatory aspects concerning the sale are in progress.
Bongani Ndlovu