Nampak has delivered higher earnings at the halfway stage, as the group focused on margin management, cost containment and efficiency improvements.
The packaging group, valued at R3.7bn on the JSE, reported a 5% increase in headline earnings per share (HEPS) from continuing operations to 5,683.5c for the six months to end-March.
Revenue from continuing operations was 11% higher at R5.7bn due to volume growth and price management. Operating profit grew 7% to R952m, it said in a statement on Friday.
For total operations, the group recorded a profit of R3bn after a loss of R135m in the prior period.
Beverage SA’s revenue growth was hampered by a slower than planned commissioning of the Springs Line 2 as demand in SA for beverage cans exceeds supply. Diversified SA and Beverage Angola reported strong revenue growth.
Nampak continues to make good progress in decreasing debt levels, assisted now by the sale of Bevcan Nigeria, strong operating cash flow and lower interest costs but partially offset by an increased investment in net working capital.
The R1.5bn reduction of net debt excluding lease liabilities was primarily due to the proceeds from asset disposals. Including lease liabilities, net debt of R3.9bn decreased from R5.7bn.
The disposal of Bevcan Nigeria was successfully concluded at the end of January for R1.3bn and resulted in a recycling of the foreign currency translation reserve of R2.4bn into the reported group profit for the period.
“This disposal represented 50% of the proceeds required from the asset disposal plan and was critical in the group’s deleveraging and derisking strategy, reducing risk associated with exposure to the Nigerian market,” it said.
Proceeds of R77m for the disposal of some of its Kenyan assets were received in cash subsequent to period-end.
Nampak also received the proceeds from the disposal of Zimbabwe business I&CS for R145m. The disposal of its 51.43% interest in Nampak Zimbabwe (NZL) for a maximum of $25m is subject to the buyer securing funding, Competition Commission regulatory approval being granted and the deal being approved by the shareholders of TSL.
“The NZL disposal will contribute significantly to the reduction of the group’s net debt and the elimination of the associated risk and volatility of operating in the Zimbabwe economy. The proceeds will be payable in US dollars,” Nampak said.
Growth prospects for Beverage SA for the short to medium term remains encouraging with can demand exceeding supply, it said. The strategic initiatives include enhancing capacity and improving operating efficiencies to cater for the aforementioned.
Market share gaining opportunities remain prevalent for its diversified SA unit. The market and the economic situation appeared stable in Angola, with revenue trending positively, Nampak said.
The group’s share rose 2% to close at R440 on the JSE on Friday, bringing its gains for the year to date to 7.3%. Over the past year Nampak’s share price has surged 135.3%
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