Nampak to focus on cost containment

Senior Business Writer

LISTED paper and packaging group Nampak Zimbabwe Limited says despite overall volumes for the third quarter ended June rising by two percent it will focus on cost containment measures in order to preserve margins and improve profitability across all the businesses.

Nampak is engaged in the manufacturing of paper, printing and packaging products, leasing biological assets and the timber processing plant.

It operates through segments in the printing and converting, plastics and metals and services. In a trading update, Nampak group managing director, Mr John van Gend, said despite the tight liquidity, which affected volume offtake in some product lines such as HDPE and commercial cartons, overall volumes for the third quarter were two percent up compared to the prior year period.

“Group volumes for the third quarter were two percent ahead of prior year with most of the product lines higher than last year except for HPDE and commercial cartons which were affected by a slowdown in demand and increased competitor activity.

“Cumulative volumes for the nine-month period to June 2024 are now three percent below prior year due to volume recoveries in the current quarter, which have made up for the volume losses in the previous quarter, particularly in the paper cluster as well as in metals,” he said.

Group revenue for the nine months to June was 10 percent down in US dollar terms compared to prior year. The firm said this is mainly due to FY23 benefiting from a record tobacco crop in Zimbabwe, compared to a drought year in FY24.

In the printing and converting segment, Hunyani Paper and Packaging sales volumes at Hunyani Corrugated division were two percent down on prior year. Sales volumes to the tobacco sector were four percent ahead of the same period last year due to early season deliveries.

On the other hand, commercial carton volumes were 19 percent down on prior year and have been affected by competition with lower price offerings.

However, the firm noted an improvement in the horticulture volumes saying there is continued focus on developing this market. The Cartons, Labels and Sacks Division sales volumes were three percent down on prior year due to reduced demand for tobacco paper wrap.

Other commercial packaging was seven percent up on prior year due to improved demand. Metals volumes were 21 percent ahead of prior year due to raw material availability.

Plastics volumes were 10 percent down on prior year on the back of liquidity challenges for some major customers.