Nampak revenue jumps 19pc in Q1 despite economic headwinds
Listed packaging products maker Nampak Holdings Limited’s revenue for the first quarter to December 31, 2023, jumped 19 percent to $172.5 billion, as volumes for the period were ahead of the same period in the prior year. In historical terms, revenue was 845 percent above the comparable period.
Overall volume performance for the period was 8 percent ahead of the prior year, with total volumes across all business units exceeding prior year levels. However, some product categories, such as metals, were behind the prior year mainly due to raw material shortages during the period under review.
The period remained challenging due to economic headwinds affecting not only Nampak but also several other businesses.
“The first quarter from October 2023 to December 2023 was negatively affected by exchange rate volatility and power shortages, mainly at the Ruwa plant as well as a ZESA fault at CMB in December which lasted for two weeks,” said the group managing director John Van Gend in a trading update for the period.
“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.
However, Nampak’s order book remained firm, particularly for paper products and preforms, although inflationary pressures saw an increase in the cost base. The shift in turnover mix towards more US dollar-denominated transactions helped maintain margins for the period under review.
Van Gend said the firm remains profitable despite the difficulties faced.
Net working capital increased due to an increase in inventory. The group closing cash balance was $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 according to the packaging products-making firm.
In terms of divisional operations, Hunyani Paper and Packaging recorded volumes that were 5 percent ahead of the prior year, with a significant recovery of commercial volumes due to firm demand and improved raw material supply.
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.
Volumes at Megapak were 12 percent ahead of the prior year despite the increased power outages. The company recorded demand that has remained 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,” Van Gend said.
At CMB, volumes closed the period 10 percent ahead of the prior year due to a recovery in HDPE volumes for the period under review. However, metals volumes were 31 percent behind the prior year due to raw material shortages and the impact of the 2-week power blackout.
The company sees a difficult second quarter due to the ongoing economic challenges, although the Government is making efforts to rectify the problems. Other challenges, such as the impact of the El Niño weather pattern, will also have an impact on operations.-businessweekly
