Nampak plans for African packaging expansion

28-May-2013 - Last updated on 29-May-2013 at 11:30 GMT

Plastic milk bottle sales were flat in pound sterling terms

Related tags Africa

Nampak plans to invest in expansion in its African heartland, according to outgoing chief executive Andrew Marshall, reporting on the packaging firm's interim results.

In a trading statement, Marshall said profits for the company continued to grow off the back of investments already made and referred to "other exciting opportunities that we are currently pursuing".

"We have recently successfully raised $175m in the US Private Placement market at extremely competitive rates and the proceeds will be used to fund our African expansion strategy."

Meantime, the business said it had taken hits in the six months to March 31 for several reasons. A marked downturn in consumer spending in South Africa during the second quarter resulting in reduced demand for most types of packaging, it said. As a result, lower average selling prices agreed as part of long-term supply contracts cut trading margins for Nampak's beverage can and glass business.

Downturn would continue

Its paper businesses were most affected by the downturn, which it predicted would continue, with sales of folding cartons, flexible packaging and corrugated boxes affected. In addition, fruit and vegetable can sales also fell. Sales of plastic milk bottles in the UK were flat in pound sterling terms.

However, it claimed signs were positive overall. There was continued growth in beverage cans and Nampak's project to convert drinks cans from tinplate to aluminium was on track, it said. Sales of fish cans were also higher.

"Our operations in the rest of Africa are expected to continue generating good results and the UK business is expected to improve on last year," said Marshall. "Overall ... we believe the group is strategically well positioned for ongoing growth, especially in Africa."

'Profitability improved significantly'

Marshall is scheduled to retire from his role at Nampak in March 2014. "During his tenure, Nampak's profitability has improved significantly, under-performing businesses were closed or sold and the expansion into the rest of Africa has accelerated," said chairman Tito Mboweni.

"We will be considering both internal and external candidates and will announce his successor in due course."

Group revenue increased by 7% to 9.4bn South African Rand (€74.2m), Nampak reported in its half-year statement. Group trading profit increased by 6% to just under 1bn South African Rand (€78.9m).

Group operating profit increased by 13% and was enhanced by a gain on the re-evaluation of the acquisition of the Elopak joint venture, clinched last year, and a gain on reconsolidation of Zimbabwean business entities.