30 May 2019

Currency volatility and adverse macroeconomic conditions impact Nampak

Read more +
Article by Nampak 21 November 2014

Rest of Africa operations drive earnings growth

Nampak Limited, Africa’s leading diversified packaging manufacturer, announces its results for the financial year to 30 September 2014.

Highlights:
• Revenue up 10%*
• Trading profit up 8%*
• Headline earnings per share up 14%*
• Final dividend up 9% to 107.0 cents per share
• Trading profit from the rest of Africa up 25%, now accounts for 30% of group total
• R3.3 billion invested in acquiring a beverage can facility in Nigeria
• Capital expenditure of R2.6 billion
• B-BBEE rating improved to Level 3
• Agreement after year end on sale of Corrugated, Sacks and Tissue for R1.6 billion
* From continuing operations

CEO André de Ruyter says:

“Nampak had a strong 2014, marked by continued delivery on our ambitious strategy to unlock further value from our base business and accelerate growth in the rest of Africa. The contribution to trading profit of operations in the rest of Africa increased to 30% from 26% in 2013.
Notable achievements in South Africa in the year were the commissioning of the third glass furnace, the sale of the Cartons and Labels division and the conversion of our beverage can lines in Springs to aluminium. Throughout our operations, the launch of the ‘buy better, make better, sell better’ business improvement initiatives as well as the concerted efforts to improve our safety record continued to drive performance. The group achieved a Level 3 B-BBEE rating, an improvement on the Level 4 rating in 2013.
During the year we took a critical look at our business and put in place various overhead cost management and business improvement programmes. Active portfolio management continues to be a theme, with an agreement reached shortly after year end on the disposal of the South African Corrugated, Sacks and Tissue divisions for an amount of R1.6 billion. We also continue to pursue a number of growth opportunities in east and west Africa.
Total capital expenditure for the year amounted to R2.6 billion (2013: R1.4 billion, [Status]). We spent R1.9 billion in South Africa and R702 million in the rest of Africa. In South Africa, our investments benefited from the government's Section 12I Tax Allowance Incentive for a brownfields investment.
With the outlook for South African economic growth modest at best, Nampak is putting a strong emphasis on rigorous management of factors under its control. Already established as the packaging leader in Africa, with operations in 11 African countries beyond South Africa’s borders, we continue to focus on taking advantage of Africa’s upward growth trajectory.”


Results overview:

In 2014, Nampak’s overall group performance was in line with expectations. Headline earnings per share from continuing operations rose by 14% to 237.1 cents from 207.7 cents, supported by a 10% increase in revenue and an 8% increase in trading profit. Charges attributable to the impairment of the South African Corrugated, Sacks and Tissue divisions arising from their proposed disposal reduced group operating profit which fell 16%. Trading profit from the rest of Africa increased by 25% to R616 million due mainly to the contribution of the newly acquired Bevcan Nigeria and the continued good performance of the Angola beverage can operation.
In South Africa, operating conditions continued to be challenging with trading profit declining by 15% due to margin pressure experienced in the Paper, Flexibles and Plastics divisions. Nampak Glass posted an operating loss because of capacity constraints in the final quarter resulting from the late commissioning of the third furnace and production inefficiencies on the two other furnaces. Following management intervention, the outlook for our Glass division for the current year is significantly improved.
In line with the group’s strategic initiative to actively manage its portfolio, subsequent to year end Nampak agreed the disposal of the South African Corrugated, Sacks and Tissue divisions for R1.6 billion. The transaction will be finalised once all conditions precedent to the disposal are met, which is expected to be in the first half of the 2015 financial year.

The final dividend was increased by 9% to 107.0 cents per share, resulting in a total dividend of 153.0 cents for the year (2013: 140.0 cents, [Status]).

Outlook:

The South African business environment is expected to remain challenging in 2015, however, Nampak will continue to focus on unlocking value from its base business. Efficiency gains from the conversion of many of its beverage can lines to aluminium from tinplate, as well as from the new glass furnace, are expected to contribute to earnings in the year ahead.

In the rest of Africa, Nampak is strategically well placed with strong market positions and a growing presence. The group is pursuing its strategic objective to accelerate growth in the rest of Africa to ensure that this contributes to sustainable earnings growth in the longer term.
Back to top ^