Not quite packed up and ready to go, but getting there
Nampak earnings up as R1.3bn of previously frozen cash injected from Nigeria, Angola and Zimbabwe
Nampak expects higher economic growth forecasts and improved business confidence to drive the demand for packaging products in 2018 and 2019.
But in spite of much better gearing and better cash remittances from Nigeria, no dividend was declared in the interim period to March 2018 as a result of “significant” frozen cash balances in some countries.
The overall result was hit by rand strength against the dollar. Also, Nampak had decided to dispose of its glass business to free up cash for growth mainly in its metals division, along with debt reduction and enhancing free cash flow. Glass is now a discontinued operation.Operating profit fell 6% to R1-billion in the six months from the same period previously. This was mainly on foreign exchange losses of R75-million from the devaluation of the Angolan kwanza, the cost of repatriating cash from Nigeria, net impairments of R26.6-million mainly from the European dairy filling business, and retrenchment costs in the group’s plastics operations.
However, trading profit rose 7% to R1.2-billion, even as revenue rose a slow 2% to R8.8-billion. Meanwhile, headline earnings per share jumped 10% to 132c per share as R1.3-billion of previously frozen cash was injected from Nigeria, Angola and Zimbabwe.
“We are quite happy with this result,” Nampak CEO André de Ruyter said on Wednesday. He said performance from continuing operations was good and that beverage can operations and plastics in the rest of Africa produced “pleasing” results. The share was up 2.34% at the close.
Mark Hodgson, an analyst at Avior Capital Markets, said it was “a fairly indifferent result with real growth from continuing operations, but virtually flat on a group basis assisted by a low tax rate”. He said Nampak had not disclosed who might buy the glass operations, “but some international glass manufacturers have apparently been approached. There is better use of capital by Nampak in its core Bevcan operations and better value for a new owner [of glass],” he said.