After furnishing investors with more information about the factors behind Nampak’s earnings, which rose year on year but slipped from the halfway mark, Nampak’s shares surged as much as 11% on Thursday.
Despite posting a positive update on significantly improved annual earnings ahead of final results expected on December 2, Nampak shares fell 12.5% to R400.76 on Wednesday when it told investors it expected to report headline earnings per share (HEPS) from continuing operations for the year ended September of 3,100c-3,500c.
The earnings reflect a significant rise compared with a headline loss of 39,004.6c a year ago, but they are lower than the R447m headline profit and HEPS of 5,393.9c that were reported at the group’s June interims.
“The full-year earnings flagged were below the first-half numbers — but there is a change in continuing operations and then the numbers in the explanatory note,” said Chronux research analyst Rowan Goeller. “It was really the comparison to the first-half that was the issue — but the numbers are not comparable.”
For total operations, it expects to report HEPS of 1,250c-1,450c after a headline loss of 46,811.7c in the 2023 financial year, it said.
Nampak stock was trading 9.34% higher at R438.18 by midday on Thursday after the company released a supplementary statement unpacking more details on its earnings performance, saying several shareholders had requested additional information on top of the scant note of the previous day.
The manufacturer said in contrast to the R290m one-time gain from a restructuring of post-retirement medical aid benefits in the first half of the financial year, numerous business-related events and non-recurring expenses in the second half of the year harmed headline earnings.
This included R29m for cyber recovery and security; R25m for retrenchment and restructuring; R38m for additional foreign exchange losses in Angola; R112m for refinancing and related fees; and the effects of the seasonal volume effect and the Springs Line 2 commissioning delay in SA’s beverage industry.
An additional one-off tax charge of R65m was recognised in the second half of the financial year, Nampak said but assured shareholders that the ongoing operations’ fundamental performance was still strong.
“The underlying performance of the continuing operations remains sound and the outlook remains consistent with previous guidance provided,” said the group. “Management will provide comprehensive insights into the full-year results during the presentation of the results on Monday, including evidence of ongoing improvements in the group's core metals business.”
The packaging manufacturer has been making strides in its turnaround strategy under CEO Phil Roux, having completed an oversubscribed rights issue and a raft of measures to deal with its debt pile, section 189 retrenchments and selling noncore assets to emerge a leaner more agile company.
Its latest advancement in its asset disposal project was its October announcement to sell its 51.43% holding in Nampak Zimbabwe to the Zimbabwe Stock Exchange-listed TSL for $25m (about R438m). The Johannesburg-based company has also recently exited Nigeria, where forex losses were particularly acute as the naira depreciated sharply against the dollar, resulting in a surge in costs for raw materials funded in the US currency. The Nigerian Federal Competition and Consumer Protection Commission’s approval is the final requirement to complete the sale.
By market close on Thursday, Nampak’s share price was up 8.54% to R435.
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