Nampak focuses on cost control as demand bulks

Nelson Gahadza

Nampak Zimbabwe says overall demand for packaging materials significantly improved in 2021 benefiting from the recovering economy, led by the rebound in agricultural and mineral commodities.

John Van Gend, the group’s managing director, said as demand grew, the company focused on cost containment within a difficult trading year.

“The company continued to invest in the business where there was growth whilst looking at potential new opportunities to improve product offerings and quality and there was improvement in accessing foreign exchange through the official foreign currency market,” he said in a statement accompanying the group’s financials for the year ended 30 September 2021.

Van Gend said the year ahead is forecasted to be characterised by strong economic headwinds, however, given the continual focus on cost control and margin preservation, the Group is well positioned to address these challenges.

Nampak Zimbabwe Limited is a publicly limited Company incorporated and domiciled in Zimbabwe. The main activities of the Group are manufacturing of paper, plastic and metal packaging products and leasing of biological assets and property.

Van Gend said Hunyani Paper and Packaging sales volumes for the full year improved by 23 percent compared to prior year.

“The improvement was due to firm demand for commercial cartons throughout the year for both Hunyani Corrugated and Hunyani Cartons and Labels divisions,” he said.

He added that growth in tobacco cartons was higher on the back of an improved tobacco crop but was curtailed by raw material supply constraints in the 4th quarter. On the other hand, regional exports were marginally lower.

At Mega Pak, the full year sales volumes increased by 68 percent compared to prior year mainly due to strong demand across all product categories and improved raw material availability.

Van Gend said exports recovered in the regional markets due to relaxation of Covid-19 restrictions.

Carnaud Metalbox sales volumes for the full year grew by 31 percent compared to the prior year and the improvement was driven by strong volume growth in the HDPE category with a marginal improvement in metals. “Closure volumes were slightly down,” he said.

Van Gend said the group’s capital expenditure amounted to $284,9 million up from $147,6 million in 2020, which was a significant increase on prior year and focused mainly on completion of projects started in the previous year.

“There are some significant capital projects currently being reviewed by the company and should funds become available, it is our intention to implement them,” said Van Gend.

He said due to the need to retain sufficient reserves to cover the working capital requirements of the business remains paramount, as does the need for capital expenditure to upgrade and replace aging plants, the company waived payment of dividend.

He noted that the group continued to maintain stringent sanitising measures in accordance with Government policy and WHO guidelines.

Van Gend said the disposal of the Group’s 50 percent shareholding in Softex Tissue Products (Private) Limited to Art Holdings Limited was concluded in the second half of the year.