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JOHANNESBURG. — Nampak, Africa’s biggest manufacturer of beverage cans, plans to expand in Nigeria through acquisitions that may exceed its largest takeover deal to counter slowing growth in its main South African market. Ethiopia is a target for expansion in East Africa due to its population of about 92-million, while Ghana is the most prominent untapped market in the west, CEO Andre de Ruyter said. In South Africa, which accounts for 70 percent of sales, the strategy is to protect dominant market share and reduce costs, he said last week.

“The growth opportunity to take us to the next level of size can only come from Africa,” Mr de Ruyter said.
“There are sizable opportunities in Nigeria. I am bullish on Ethiopia. Ghana we need to look at quite closely.”

Nampak, which supplies firms from Coca-Cola to SABMiller, is expanding its plants in sub-Saharan Africa to benefit from a consumer market of 900-million people that spends at least 20 percent of their earnings on food and beverages. The firm agreed to buy Alucan, a Nigerian packaging company, for R3.3bn in its biggest deal yet last year and is studying an option to buy a plastics maker in the continent’s largest economy.

Companies in Africa are using the advertising potential of cans to market products and promotions, while the growing popularity of beer is also driving growth, Mr de Ruyter said.

Nampak counters Nigeria’s unreliable power supply by generating all its own electricity.
The company, which has operations from Angola and Botswana to Kenya and Zimbabwe, will avoid regions where there is instability, such as the Central African Republic and Niger, and probably will not expand into North Africa or former French colonies.

A former executive at Sasol, de Mr Ruyter became Nampak CEO at the beginning of March. The company reported first-half sales growth of 12 percent on May 27, including a 9 percent increase in South Africa and a 24 percent rise in the rest of the continent. The profit margin in its home market declined to 8.5 percent from 9.1 percent a year earlier, compared with a total margin of 11 percent.

Profit margins in South Africa will start recovering to show “modest growth” in financial 2015, Mr de Ruyter said.
The company plans to reduce product lines to focus on the biggest earners, helping to boost productivity, lower costs and “unlock cash” that can be used to fund growth, he said. About 10 percent-15 percent of Nampak’s 7 500 workers in South Africa have joined the metal workers’ strike that has affected about 12 000 employers since July 1.

“Obviously we had anticipated that the strike would be coming,” Mr de Ruyter said.
“So we had our contingency plans in place. But they only take you so far. There is no substitute for running your factory.”— Bloomberg.