Nampak’s revenue drops by 17% to R6.5 billion on weaker economic conditions

Nampak announced interim financial results for the 6 months ended 31 march 2020. The group’s revenue dropped by 17% to R6.5 billion, primarily due to weaker economic conditions in South Africa, Angola and Zimbabwe. Operating profit was R287 million, down 68%.

Trading profit declined 39% to R633 million, as a result of a loss in Divfood, reduced demand in Angola and the overall beverage can market declining in South Africa. 

Erik Smuts, Nampak CEO, said, “Overall weaker economic demand in our key markets, continued pressure on consumers’ disposable income and net impairments of R3bn negatively impacted these results. Although the Nigerian outlook has since deteriorated, Bevcan Nigeria enjoyed volume growth, but Divfood, Bevcan Angola and Bevcan SA performed below expectations due to total market contractions and loss of a key customer. Capital expenditure was tightly controlled, with the most significant expenditure on the conversion of the steel beverage line in Angola to aluminium. The R1.6bn net proceeds from the disposal of non-core assets, and healthy cash transfers from Angola and Nigeria will be used to reduce our debt.”  

Capital expenditure for continuing operations rose 13% to R407 million. This was due to the conversion of the line in Angola from steel to aluminium. The forecast capex for the year is between R650 and R750 million.

Turning to the outlook for the rest of year, Smuts said, “The heightened uncertainty as a result of COVID-19 and the impact of individual country's responses increases the difficulty in predicting the Group's 2020 performance. Nampak has experienced significantly weaker overall demand in SA since the last week of March. Changed consumption patterns during lockdown have resulted in greater demand for food cans, but reduced demand for beverage cans and cartons for alcoholic beverages.”