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Cape Town - In its unaudited group results for the six months to end-March 2016, pan-African packaging manufacturer Nampak [JSE:NPK] on Wednesday announced a 21% rise in adjusted headline earnings per share before foreign currency translation effects.
Headline earnings per share rose by 4%, after taking into account a R114m foreign exchange rate translation loss. Group revenue increased by 10% to R9.4bn, with group trading profit gaining 17% to R989m.
The company said it will raise R1.7bn through sale and lease back of the South African property portfolio to reduce liabilities. No interim ordinary dividend was declared.
Packaging sales benefited from import replacement due to a weaker rand, new contractual volumes and increased beverage consumption as a result of an unusually hot summer in South Africa, the packaging firm said in a statement.
Chief executive André de Ruyter was particularly satisfied with the turnaround in the glass division, which, he said is now running well and delivered a profit of R44m for the half-year.
Nampak’s plastics business boosted trading profit by 20% on increased revenues and good cost control, while the paper business increased trading profit by 34%.
According to De Ruyter improvements at the company’s aluminium beverage can lines in Springs have allowed it to commence consultations on the shutdown of its tinplate line in Durban.
"These interventions will put the business in a strong position to prepare for what it expects to be a challenging second half for the South African consumer industry.
“We have some tough macroeconomic conditions to contend with, and these interventions will enable us to better navigate the challenges that lie ahead,” said De Ruyter.
Africa remains Nampak’s growth engine, with trading profit from the rest of Africa coming in at R462m, up 45% on the previous reporting period. The region now contributes 47% of group trading profit, up from 38% in 2015.
De Ruyter said Nampak’s rest of African operations remain profitable and trading margins remain attractive, even after adjusting for the impacts of foreign exchange movements.
The medium-term outlook for packaging in South Africa and other key African markets remains favourable, underpinned by some 900 million emerging consumers in sub-Saharan Africa.
He added that improvements in procurement and supply chain efficiency are expected to deliver R120m in savings for the year. "In addition, strong general cost containment measures have been put in place throughout the organisation, with savings expected for the financial year 2016."
