Online Reporter
Business Reporter
Nampak Zimbabwe expects heightened geopolitical tensions and the recent unrest in South Africa to maintain pressure on operating costs despite an anticipated recovery in tobacco packaging and plastics volumes.
Group managing director and executive director Mr John van Gend said tensions in the Gulf region and the Russia-Ukraine conflict were likely to continue driving volatility in fuel and raw material prices, while anti-immigrant demonstrations in South Africa could weigh on regional economic activity.
Nampak, however, noted that the operating environment remained relatively stable during the quarter, supported by stable ZiG and subdued inflation.
However, tight management of ZiG liquidity continued to shift a greater proportion of transactions towards the United States dollar.
“The recent anti-immigrant demonstrations in South Africa may negatively affect regional economic activity through increased repatriation of foreign nationals and disruption to diaspora remittance flows,” van Gend said in the company’s trading update for the third quarter ended June 30, 2026.
He said unreliable electricity supplies, particularly in Ruwa, also increased the company’s reliance on generators, adding to production costs.
Rising fuel and raw material prices further squeezed margins across the group.
In terms of performance Nampaks group revenue for the nine months to June 30, 2026 rose 9 percent to US$67,8 million, while volumes increased 16 percent compared with the prior year.
The volume growth was largely driven by a substantial carry-over of late-season tobacco case orders from the local tobacco industry during the first quarter.
Third-quarter volumes increased year-on-year, supported by improved demand for plastic and tobacco packaging.
However, metal packaging volumes declined significantly due to subdued market demand and raw material supply chain disruptions.
Despite the improved revenue and volume performance, profitability remained under pressure from rising costs and competitive market pricing.
In the printing and converting segment, Hunyani Corrugated Products recorded a 26 percent increase in volumes for the nine months, benefiting from the larger tobacco crop and increased carton demand during the first quarter.
Third-quarter tobacco sector sales volumes rose three percent year-on-year, with management expecting demand to remain resilient through the end of the tobacco season.
Commercial carton volumes, however, fell nine percent as some customers shifted to in-house manufacturing.
The Cartons, Labels and Sacks division recorded an eight percent decline in third-quarter sales volumes and a five percent decline for the nine months, with the business focusing on operational efficiencies to improve competitiveness.
In the plastics and metals segment, Mega Pak recorded an eight percent increase in nine-month volumes, while third-quarter sales volumes jumped 14 percent year-on-year as demand recovered across product categories.
However, margin compression and increased power outages in Ruwa weighed on performance.
Although investment in generators helped minimise production disruptions, competitive pressures limited the company’s ability to pass on higher energy costs to customers.
Carnaud Metalbox recorded a four percent increase in nine-month volumes after recovering from production-related stoppages in the first quarter.
Third-quarter volumes rose 14 percent, supported by a 33 percent increase in HDPE volumes following stronger customer demand and capacity enhancements.
Going forward, Nampak said it expects to benefit from the larger tobacco crop in its paper operations and continued volume recovery in plastics.
Nampak said it remains focused on improving operational efficiency, controlling costs and strengthening cash generation to support sustainable growth.
