Packaging group Nampak, which is planning a R2 billion rights issue, said yesterday that a R207 million profit crumpled into a R147m attributable loss in the year to September 30.
This was in spite of a 21% increase in revenue to R16.9bn due to higher volumes and unusually high commodity prices.
There was a 13% increase in trading profit to R1.6bn. Operating profit before net impairments, however, fell 4% to R1.2bn.
Although trading profit was “pleasing”, an “increase in foreign exchange losses, higher interest rates and increased impairments contributed to a lower net profitability,” said CEO Erik Smuts in a statement.
Nampak’s share price fell 2.63% to R1.48 yesterday, adding to a price that had already fallen from R202 since November 26, and since the rights issue was announced.
The group said while trading conditions were challenging in the year, green shoots of recovery were evident in some markets. Cost of sales in the past year was impacted by high metal prices due to challenging supply chains, with concomitant increases in logistics and shipping costs.
The South African beverage can market experienced “unprecedented growth”, while Angolan volumes grew by almost 30% during the last quarter, exceeding expectations, the group said.
Efforts to sell certain assets yielded no results. Certain debt maturity dates were extended and some covenants relaxed. The group planned a rights issue to refinance the debt package and repay R1.35bn to lenders in March, 2023.
“With a strengthened balance sheet, we can focus on our operations to leverage growth opportunities for the benefit of our stakeholders,” Smuts said.
He said a strong recovery in the beverage can operations was diluted by a disappointing result from DivFood, and the impact of depreciation of the Zimbabwe dollar on the rand-reported results of the Zimbabwe operations.
Operating profit was assisted by a 1% decrease in employee costs before including the R222m benefit from the Malbak Pension Fund surplus.
There had been strong trading results from Bevcan South Africa and Nigeria and a recovery in Bevcan Angola. The Zimbabwe operations continued to perform well and remained self-funding.
A once-off insurance loss of R50m was incurred by Nampak Insurance Company. Nampak was impacted by forex losses of R546m in the year from Nigeria and Angola.
Operating profit of R640m declined 31%, having absorbed net impairment losses of R512m, with R392m of the impairments being attributable to the impact of increased global risk premiums and higher interest rates on Nampak’s weighted average cost of capital.
Net impairment losses related mainly to DivFood South Africa, Rigid Plastic, Bevcan Angola and Metals Nigeria. Net finance costs increased 21% to R586m due mainly to the higher required investment in net working capital, interest rate increases and interest costs of R64m.
BUSINESS REPORT