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Nelson Gahadza Senior Business Reporter
Nampak Zimbabwe says it registered volume growth across all the businesses operating units during the quarter ending June 30, 2022, partly due to the relaxation of Covid-19 lock-down regulations.
The company said despite the volume growth, the availability of foreign currency remained critical, as delays in settling allocations through the auction system were more apparent in the quarter where about US$2 million already allocated is still outstanding.
Mr John van Gend, the group’s managing director, in a trading update for the third quarter and nine months said amounts of foreign currency for imports received from customers assisted in closing the gap.
“Imbalances within the supply chain continue with some orders delayed due to supply chain inefficiency. The increase in volumes was nevertheless negatively affected by inflation, and margins were under pressure due to increased competition,” he said.
In terms of revenue performance, turnover in inflation adjusted terms for the third quarter was 4 percent ahead of the prior year quarter and 283 percent ahead of the same period in historical terms.
Mr Van Gend said the cumulative revenue, in inflation adjusted terms for the 9- month period, was 18 percent ahead of the same prior year period and 178 percent above the same period in historical terms.
“This is because of improved sales volumes and selling price adjustments for the period to date. The Group remained profitable despite gross margins and costs coming under pressure,” he said.
During the period under review, net working capital increased mainly due to an increase in debtors. Mr Van Gend said that the Group had a cash holding of $989 million at the end of the third quarter.
He said that the higher balance is due to receipts from customer prepayments during the period and the majority of this balance will be applied to stockholding and the settlement of trade payables.
In terms of individual business unit performance, sales volumes at Hunyani Corrugated Division for the third quarter were up on the prior period by 27 percent with the tobacco case volumes ahead of the same period last year due to additional orders secured from the region.
“Although demand for commercial volumes remains firm, volumes were in line with the prior period due to constrained raw material supplies,” said Mr Van Gend.
He said cartons, labels and sacks business sales volumes for the third quarter were down on prior year by 35 percent as demand for SO bags slowed down.
Mr Van Gend added that tobacco wrap deliveries were completed earlier, compared to prior year, and this contributed to the drop in volumes.
“Essential machine upgrades were completed on the bulk bags section at the beginning of the quarter and this is expected to result in improved production volumes in this section going forward,” said Mr Van Gend.
In the plastics and metals segment, at Mega Pak, the third quarter sales volumes grew by 12 percent compared to the prior period with increased demand in the preforms market and large injection moulding being the major contributors, although closures were down compared to prior year.
“The improved volumes were driven by the beverage manufacturers in particular. Exports into the Democratic Republic of Congo were lower although there is some indication of recovery in volumes,” said Mr Van Gend.
At CarnaudMetalbox sales volumes in the third quarter were 8 percent above the same period last year while metal volumes were up 78 percent, with food can and crowns leading the recovery.
In the plastics, performance was mixed with higher closure volumes, 17 percent ahead of the previous year, but offset by reduced HDPE (High Density Poly Ethylene) bottle volumes that were 20 percent below the prior period.
During the nine month period, the group’s capital expenditure amounted to $451,2 million relating mainly to projects started in the prior year or spares capitalised in line with IFRS requirements.
Mr Van Gend said various projects are under active consideration and may be pursued, subject to availability of foreign currency.
“A large injection mould machine was damaged in transit by the transporter and its replacement is not expected to arrive before the financial year-end,” he said.
On forestry, Mr Van Gend said agricultural and horticultural development of the Maganga Estate near Macheke is well under way and is in line with the Government’s National Development Strategy 1, following its issue of a lease over the property.
He said the company has a strong order book which is full and demand continues to accelerate, with the main problem being inability to source sufficient foreign currency for the importation of raw materials.
Online Reporter