Nampak's group revenue for six months ended March 31 up 12% year-over-year to 9.8B rand, with trading profit from continuing operations up 10% to 1.1B rand; CEO says 'there remains very attractive potential for further growth'
May 28, 2014
– Nampak today released its interim results for the six months ended 31 March 2014.
Group trading income grew by 10%, with the company’s business in the rest of Africa increasing its contribution to trading income by a particularly pleasing 23% to R261 million, with revenue growth of 24% compared to the prior year. Turnover generated in the rest of Africa now amounts to R1.5 billion. The Angola beverage can facility, and the operations in Nigeria and Malawi all improved on last year whilst there was a steady performance from Zambia. The Alucan beverage can operation in Nigeria which was acquired for US$301 million on 25 February 2014 also made a contribution to the results in its first month of operation. The rest of Africa now accounts for 24% of the group’s total trading profit.
Group revenue increased by 12% to R9.8 billion and trading profit from continuing operations increased by 10% to R1.1 billion.
Headline earnings per share increased by 9% and the dividend was increased by 10% to 46.0 cents per share.
CEO André de Ruyter who took over on 1 March 2014 said, “Nampak has produced a very solid set of results and our strategy of investing in Africa continues to bear fruit as is reflected in the results that have been achieved in the six months to March 2014. We believe there remains very attractive potential for further growth in the rest of the continent and we are confident that this trend will continue. Despite trading conditions being more challenging in South Africa, we continue to improve our competitiveness in our home market through a focused programme of capital investment, portfolio rationalisation and cost management”.
“There was further good demand for beverage cans and the conversion from tinplate to aluminium cans is well advanced. Sales of fish, vegetable and meat cans were all higher and there was strong demand for aerosol cans. Construction of the third glass furnace at our Roodekop factory is underway and will be commissioned during July. This will give us the flexibility to produce a broader spectrum of colours without the need for expensive and time consuming colour changes”.
“Overall margins in the South African metals and glass segment increased to 11.3% from 11.0% last year”.
“The paper businesses continued to be affected by weak demand and trading profits and margins were marginally lower than last year. The flexibles business was affected by reduced demand in the second quarter and the weaker rand resulted in higher raw material prices. In the plastics businesses revenue was up but trading profits were below last year which included a once-off profit on the sale of equipment”.
“The plastic milk bottle business in the United Kingdom performed well in Pound terms although trading profit was lower due to the adoption of a new accounting standard on pension fund costs. Sales of the Nampak-patented lightweight Infini bottle have now exceeded 500 million units since they were introduced in 2012”.
“There was higher demand for toilet tissue and disposable diapers but selling price pressure impacted on trading profit”.
“The group return on equity remained at 21%. Despite the net debt to equity increasing, Nampak is a strong cash generator and the sound investments we have made in South Africa and the rest of Africa will contribute to higher earnings and enable us to reduce the debt level in a reasonably short period of time”.
Nampak continues to deliver ongoing raw material reductions in its packaging products and drives recycling initiatives either directly or in conjunction with other industry players. Over 100,000 jobs have been created in the recycling industry. The Southern Africa region is amongst world leaders with over 72% of beverage cans recycled. Additionally, 40.6% of glass and 57.2 % of paper is recycled. Nampak Glass itself uses over 55% recycled glass cullet in its bottle manufacturing processes. “These recycling rates are consistently improving and are aligned or better than those achieved in developed countries like the US and the EU, which validates Nampak’s responsible approach to the environment and towards sustainable waste management”, De Ruyter concluded.