Nampak records increased US Dollar sales as volumes spike

PACKAGING materials manufacturer, Nampak Zimbabwe, says its order book remains firm across its operating segments, a reflection of improving volume uptake in the group’s products despite economic pressures.

This comes at a time when the packaging firm recorded improved United States Dollar (USD) earnings in the quarter to June 2023, as the economy growingly becomes dollarised.

As it stands more companies are poised to change their functional currency to the US dollar given that the bulk of their revenues are in foreign currency.

According to the Reserve Bank of Zimbabwe (RBZ) mid-term monetary policy statement foreign currency deposits constituted 81, 51 percent of total money supply as of June 2023, while local currency deposits accounted for 18, 43 percent and currency in circulation, 0, 06 percent.

This is coming at a time when the Government is pushing to reposition the use of Zimbabwe dollar as a medium of exchange for local transactions.

However, like any other businesses, Nampak was not spared from the currency volatility experienced in the months of April, May and June, which caused inflationary pressures to be felt across all market categories.

“The liquidity crunch in the market continued to affect trading, resulting in more domestic transactions occurring in foreign currency. The Group has benefitted from improved USD collections in the quarter on the back of constrained ZW$ liquidity, most of which was deployed into working capital to meet customer demand.

“The order book across the Group’s operating units remains firm,” said John Van Gend, the Nampak Group Managing Director in a statement accompanying the trading update for the third quarter and nine months ended June 2023.

In terms of financial performance in the period under review, the groups’ inflation adjusted revenue for the nine months to June rose 41 percent to $413, 2 billion compared to the prior year period.

The group recorded marginal volume improvements and inflationary pricing were the major contributors to the revenue growth.

The group cash balance was $24, 6 billion at the end of the third quarter, mostly due to export receipts that came at the close of the period.

Nampak Zimbabwe Limited is currently the 24th most valuable stock on the Zimbabwe Stock Exchange with a market capitalisation of $92, 2 billion, which is about 0, 915 percent of the ZSE market.

The liquidity crunch in the market continued to affect trading, resulting in more domestic transactions occurring in foreign currency.

Despite inflationary pressures driving up the cost base, the group continues to be profitable.

The major reason for the increase in net working capital was an increase in debtors, according to the company.-businessweekly