PACKAGING firm Nampak Zimbabwe Limited says it has sufficient financial resources to sustain operations and pursue its strategic priorities despite reporting an almost 90% decline in profit after tax for the six months ended March 31, 2026.
Nampak’s profit after tax plunged to US$306 024 during the review period from US$2,87 million recorded in the comparable period last year.
The sharp earnings decline occurred despite revenue rising nearly 10% to US$41,74 million from US$38 million in the prior-year period, as increased demand for tobacco packaging boosted sales volumes.
Higher raw material and consumable costs, which rose 24,1% to US$25,13 million, combined with aggressive pricing competition across the group’s business segments, eroded margins and weighed heavily on profitability.
Despite these pressures, the group’s directors remain satisfied that the company has adequate resources to continue operating as a going concern, supported by a strong balance sheet, cash reserves, and continued investment in capacity expansion.
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“The directors have, at the time of approving the financial statements, a reasonable expectation that the group has sufficient financial resources to continue in operation and existence for the foreseeable future,” Nampak Zimbabwe said in the interim report for the period ended March 31, 2026.
“Consequently, the board supports the use of the going concern basis of accounting in the preparation of the financial statements.”
The group’s liquidity position remained strong, with current assets of US$36,4 million exceeding current liabilities of US$11,7 million, resulting in positive working capital of approximately US$24,7 million.
This means Nampak Zimbabwe held more than US$3 in short-term assets for every dollar of short-term liabilities, highlighting its ability to comfortably meet near-term obligations.
Cash and cash equivalents stood at US$6,41 million at the end of the period, providing an additional liquidity buffer to fund day-to-day operations, capital expenditure, and other short-term commitments.
“Raw material input cost increases, combined with aggressive competitor pricing across all segments, resulted in gross margin erosion to maintain market participation,” Nampak Zimbabwe group managing director John van Gend said.
“This has translated into lower trading profits for the half-year when compared to the prior period.”
Nampak Zimbabwe operates through two main segments: printing and converting, and plastics and metals.
The printing and converting division comprises Hunyani Paper and Packaging (Private) Limited, Hunyani Forests Limited, and Hunyani Properties Limited.
The plastics and metals segment includes Mega Pak Zimbabwe (Private) Limited and CarnaudMetalbox Zimbabwe (Private) Limited (CMB).
A significant portion of the group’s revenue is derived from packaging supplied to the tobacco industry, as well as PET preforms and high-density polyethylene closures produced by its plastics and metals operations.
“Group volumes were 25% ahead of the prior period, mainly due to the carryover of late-season tobacco case orders from the local tobacco industry,” Van Gend said.
“Volumes in the second quarter slowed down as demand across some of the categories weakened, driven by an intensifying competitive landscape. PET preform demand remained positive, whilst commercial carton and metal volumes at Hunyani and CMB, respectively, were subdued due to weak demand.”
He said tobacco volumes at Hunyani were expected to remain firm on the back of an improved tobacco crop, while demand in other categories was likely to remain flat.
“The group remains confident in the long-term prospects for an improved economic operating environment that could foster improved profitability for many businesses,” Van Gend said.
He added that the business would continue focusing on improving operational efficiencies and implementing cost-optimisation strategies, including capital expenditure where justified, while exploring new growth opportunities.-newsday
