CHRISTMAS retail trading in SA will be subdued, judging from continued weak demand for packaging from industries ranging from beverages to food in the six months to September.
CEO Andrew said yesterday Nampak could be seen as a leading indicator of retail sales because almost all consumers’ seasonal purchases required some form of packaging. Nampak makes tin, glass, paper and plastic products which are sold in SA, the rest of the African continent and Europe.
Revenue rose 6% to R19,6bn in the year to September compared with last year, but at the interim stage it was 14% higher, showing a slower second half.
Overall volumes dropped 6%, but there was some recovery of input prices and a better performance from the African operations, which were hit less hard than SA or Europe by the global credit crisis, Marshall said.
Trading income before abnormals dropped 27% to R1,1bn and R532m of abnormal items, including impairment and restructuring costs, were incurred. Headline earnings halved to 83,8c per share from 177,3c previously, mainly because of an adjustment to the value of financial instruments, and the distribution for the year was 42c compared with last year’s 100c per share.
At the end of September Nampak’s net cash holdings were R397,9m, down from R1,2bn a year ago, and its net gearing had risen to 52% from 43%. The group spent R1,1bn on capital projects in the past year, bringing its total capital investment over the past five years to R5,6bn.
The main item of capex still under way was Nampak’s factory in Angola, which would cost about 140m-150m in total and was halfway complete. Apart from that item, and two smaller projects in metals and tissues, capital spending would be reduced substantially, focusing only on maintenance and replacement.
Although 80% of Nampak’s businesses were considered profitable and competitive, 20% were either making losses or earning low returns and would be sold, closed or fixed.
Marshall said so far two businesses had been addressed, with the plastic films operations sold and the foams operations closed down. Another business would be sold and a fourth closed down.
Two other businesses had shown early signs of turning around, with corrugated packaging making a small profit last month and the Leeds carton operation making profits this and last month.
mathewsc@bdfm.co.za