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Business Reporter
Packaging material supplier Nampak Zimbabwe anticipates an improved operating environment in the second half of the year as the group remains profitable, but says more should be done by authorities to address the difficult macro economic conditions.

Nampak is engaged in the manufacturing of paper, printing and packaging products, leasing biological assets and the timber processing plant. It operates through segments in the printing and converting, plastics and metals and services.

In its half year financials to March 31, 2022, the entire group’s operations traded profitably with treasury and cash flow management being key management focus.

“The overall situation facing the economy remains fluid. We note with concern the recent significant devaluation of the official auction exchange rate and wait to see what impact this will have on prices and inflation,” Mr John van Gend, the company’s managing director said in the commentary.

The packaging sector is considered a barometer in terms of economic activity, because sectors such in agriculture, beverages, edible oils, require packaging.

The sector achieved positive growth in 2021 with a 35 percent growth in terms of volumes driven by increased demand that was experienced across all sectors of the economy, including horticulture.

Mr Gend said the company’s half year reflected an increase in volumes for the group of 16 percent over the prior year, despite the Covid-19 restrictions that have been in place throughout the first half of the year.

“The availability of foreign exchange remains a concern as well as critical for business sustenance going forward,” he said.

He noted that revenue for the period under review at $8,2 billion was 30 percent ahead of the prior year period driven by sales volumes which were up across all sectors of the business except in the commercial sector, however, margins came under pressure in order to remain competitive.

“This resulted in a decrease of four percent in trading profit to $1,3 billion,” he said.

In terms of segmental performance, Hunyani Paper and Packaging sales volumes for the period were 23 percent ahead of prior year.

Mr Gend said the major contributor to this increase was the tobacco sector which was up 66 percent as a result of early season requirements across the region.

He said commercial volumes were five percent down on prior year due to a shortage of raw materials.

Under the plastics and metals segment, MegaPak sales volumes grew by seven percent compared to the prior year due to increased demand in the large injection moulding and closures sectors. Mr Gend said preform volumes were in line with the prior year period.

CarnaudMetalbox sales volumes for the half year increased 10 percent compared to the prior year. “In plastics, HDPE was 8 percent ahead of the same period last year due to increased demand.

“Metals volumes increased by 14 percent with food cans and crowns leading the recovery. Closures were 10 percent ahead of prior year due to improved demand,” Mr Gend said.

On the group’s forestry estates, Mr Gend said a 25 pear lease has been signed with the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development on Maganga Estate, located between Marondera and Macheke, with effect from January 1, 2022.

“This enables plans to proceed with the various agricultural and horticultural development of the estate in line with Government’s National Development Strategy 1,” he said.

Mr Gend said capital expenditure of $209,1 million relates mainly to projects carried forward from the previous financial year and various projects are under consideration and will be carried out subject to the availability of foreign exchange.

The company decided against declaring an interim dividend in view of the need to conserve available cash resources for raw material acquisition and capital expenditure.