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Nelson Gahadza Senior Business Reporter
Nampak Zimbabwe says demand for its products has remained firm across all segments of the business amid increased US dollar transactions which helped the company secure suppliers of imported raw materials.
The Zimbabwe Stock Exchange-listed firm manufactures and markets packaging products which includes paper, plastic and metal packaging. It also has interests in leasing biological assets and a timber processing plant.
Managing director John van Gend said while group volumes for the quarter to December 31, 2022 was only 3,3 percent ahead of prior year, turnover for the quarter was 60 percent ahead of the prior year.
“Turnover for the quarter was 457 percent ahead of the prior year period in historical terms and inflation-adjusted trading profit at $3,131 million was 63 percent ahead of the previous year and 431 percent ahead in historical terms,” he said in a trading update.
Mr Van Gend said the group’s order book is full across all entities and demand continues to accelerate although electricity supply still remains a challenge affecting production.
“While more action is required by the authorities to address the macroeconomic challenges faced by businesses, the group remains profitable,” he said.
In terms of segmental performance, volumes at Hunyani Corrugated Division for the first quarter was 13,6 percent up on the prior period with the growth coming from improved tobacco case orders from the region, as well as some carry-over of late season orders from local tobacco merchants from the previous financial year.
“Despite strong order book, commercial sales were below the previous year by 4 percent owing to continuing challenges with paper supplies from SAPPI, following a problematic start-up after their shut down at the end of the last financial year,” said Mr Van Gend.
He added that alternative paper supplies are being explored.
The cartons, labels and sacks division sales volumes were 15 percent below the previous year due to the late arrival of paper for tobacco rolls and tea sacks as well as the delayed orders from flour millers who had sufficient stock on hand.
In the plastics and metals segment, volumes at Mega Pak were 10 percent below the comparable period for last year.
Mr Van Gend said preform and closure sales were down as major customers imported product ahead of the festive season.
He said shortage of packaging material hampered the ability to supply orders on time and in full while demand in the large injection molding market continued and the commissioning of the replacement machine has helped boost volumes.
“However, severe power cuts hampered production in the quarter with added complications of high or low voltages when power returned. This resulted in extended run times on the generators, which affected operational efficiencies,” said Mr Van Gend.
At CarnaudMetalbox sales volume for the quarter was 1 percent above the same period last year.
Plastic volumes, especially closures, were well ahead of prior year but metal volumes were down due to the power outage during the last two weeks of December, which meant that the unit was only able to operate at 50 percent capacity producing only plastic products.
“No metals were produced during the period under review,” said Mr Van Gend. He said the group capital spend of $313 million for the period under review relates mainly to spend on completion of projects from the prior year.
He said various projects are under active consideration and may be pursued subject to availability of foreign currency.
Online Reporter