Nampak Zimbabwe records increase in revenue

Judith Phiri, Business Reporter

Packaging company, Nampak Zimbabwe recorded group revenue growth of 19 percent to $172.5 billion in inflation-adjusted terms for the three months of October to December 2023, despite facing some challenges.

In a trading update for the first quarter of October to December 2023, group managing director Mr John Van Gend said the first quarter was negatively affected by some challenges that disrupted production lines.

“The group was negatively affected by exchange rate volatility and power shortages mainly at the Ruwa plant as well as a Zimbabwe Electricity Supply Authority (ZESA) fault at Carnaud Metal Box (CMB) in December which lasted for two weeks.

“The ongoing disruptions in power supplies at Ruwa, resulted in the increased usage of generators which in turn caused disruptions on production lines due to the quality of power supplied,” he said.

“Group revenue for the three months to 31 December at ZW$172.5 billion grew by 19 percent in inflation-adjusted terms compared to the prior year period. Revenue in historical terms for the same period was ZW$171.4 billion, an 845 percent increase year on year.”

He said volume increases in the business units and inflationary pricing contributed to revenue growth, while the group remains profitable despite the difficulties faced.

Mr Van Gend said the group volumes for the period under review were 8 percent ahead of the prior year with total volumes across all the business units ahead of the prior year.

“However, some product categories such as metals were behind the prior year mainly due to raw material shortages over the period under review. Net working capital increased due to an increase in inventory. The group’s closing cash balance was ZW$19.4 billion at the end of the first quarter. Most of this cash balance will be applied toward stock replenishment and the settlement of trade payables,” he added.

He said under printing and converting, Hunyani Paper and Packaging volumes were 5 percent ahead of the prior year with significant recovery of the commercial volumes due to firm demand and improved raw material supply.

Mr Van Gend said tobacco volumes were marginally below prior year volumes largely because of a higher carry-over of orders in the prior year period compared to the 2024 season.

On the plastics and metals segment, he said: “Megapak volumes were 12 percent ahead of the prior year despite the increased power outages. Demand remains firm although power-related breakdowns continue to hamper the ability to meet demand. Use of generators has assisted in minimizing the impact of the power outages.”

He said CMB volumes were 10 percent ahead of the prior year due to a recovery in high density polyethylene (HDPE) volumes for the period under review.

While, metals volumes, however, were 31 percent behind prior year due to raw material shortages and the impact of the 2-week power blackout.

Mr Van Gend said the board declared a final dividend of US$0.20 cents per ordinary share for the year ended 30 September 2023.