Nampak Limited reported a 43% after-tax profit slump in the first half of the year ended March 31 owing to depressed volumes that saw revenues across the group’s business units declining.
Despite the group’s paper segment benefiting from Statutory Instrument 64, which banned importation of various goods without prior clearance, coupled with improved tobacco packaging demand, Nampak said group revenue for the first half was 9% below prior year as a result of depressed demand in the plastics and metals segment.
Earnings per share tumbled to 0,11 cents per share from 0,2 US cents per share in the same period prior year.
“The operating profit of US$2,25 million (2016: US$2,44 million), before re-organisation costs, was 8% below the same period last year. EBITDA of US$4,07 million (2016: US$5, 05 million) reduced by 19% over the prior year period,” said Nampak in its unaudited interim results statement.
“The economic fundamentals remained difficult with low disposable income, increased cash challenges and low foreign reserves,” added Nampak.
The group said its unit, Hunyani Paper and Packaging (Hunyani ), recorded a 27% growth in revenues, resulting in improved operating profit as a result of improved throughput, product mix and savings from further rationalisation.
Hunyani’s corrugated products and cartons, labels and sacks benefited from higher demand.
Nampak’s associate, Softex Tissue Products, remained profitable although at reduced levels, noted the group.
On the plastics and metals segment, Mega Pak revenues went down by 23% due to reduced preform volumes while CarnaudMetalbox reported a 23% revenue slump compared to the same period in 2016.
High-density polyethylene bottles at CarnaudMetalbox and closures sales were depressed while metal cans experienced moderate sales improvement.
A cocktail of cost containment measures, coupled with the moderate growth in metal cans was, however, not enough to inspire profitability as the unit incurred an operating loss compared to profitability prior year.
Going forward, Nampak said, the company remains focussed on cost-containment, cash management and maintaining shareholder value.
“The improved agricultural season is expected to have positive impact on the economy,” said Nampak.