HUNYANI Holdings is set to offload its 50% shareholding in Softex Tissue Products this year as part of the group’s rationalisation process, a company official said.
Group MD Dave Bain told shareholders at an Annual General Meeting (AGM) on Wednesday the group would sell its 50% shareholding in Softex as well as complete restructuring of its division, Printopak, under the group’s five-year corporate capital plan. The other 50% in Softex is owned by Art Corporation.
Intense competition had affected profitability at Softex, with prices having been reduced last year to grow market share. The operation also struggled to secure adequate supplies of quality tissue and packaging material.
Bain said the Printopak restructuring would involve the move of lithographic machines from Bulawayo to Harare this quarter, adding the company would make an investment in a state-of-the-art lithographic carton printer and label printer.
He said the restructuring would result in a reduction of manpower as well as see the introduction of shared services with subsidiary Flexible Products.
“We will dispose of surplus and obsolete equipment,” Bain said. However, relocation was not an easy process as it required a huge amount of effort and managed time.
The group’s headcount closed last year at 479 and was expected to close this current financial year at 470.
“Our new philosophy is that less is more for Hunyani,” said Bain.
The Hunyani CEO told shareholders Dumatau Waste Paper was sold while Forest Producers in Marondera was under a lease.The Corrugated Bulawayo property had been sold as had the Mill plant, except for the Pulp Mill and Chipper.
“We expect to have completed the sale of the Pulp Mill by the second half,” Bain said. The group would also sell the Bulawayo and Norton properties and the proceeds from the disposals would fund projects that the group had embarked on.
An investment into an in-line Casemaker had been commissioned in October for US$1,27 million and was working above expectations. Bain also added an investment into generators for Corrugated products worth US$300 000 had been made.
He forecast significantly improved performance in the second half while Printopak was expected to return to profitability in the same period. The restructuring will be completed by August.
The projects included the installation of generators on all three sites and a new tobacco line modification.
Hunyani Management Services had been vastly thinned down while at Corrugated products all operations were profitable.
Giving projections for the year ahead, Bain said volumes were expected to grow while tobacco pack volumes were expected to increase due to the expected high crop size. Commercial and export volumes were also expected to rise.