Nampak, Africa’s largest packaging company, has incurred fx losses of R2bn ($135.6m) for the financial year ended 30th September 2019. Nampak has faced a double whammy of hyperinflation in Zimbabwe and the devaluation of the Angolan kwanza. It has also faced issues with changes of taxation rules in Angola.
Nampak has reported a loss of R390m ($26.5m), compared to a profit of R1.2bn ($81.3m) in FY2018. In initial trading on the JSE, shares fell 17%, although it recovered some of the loss by the end of morning trading. Nampak expects to sell its Nampak Glass and Nampak Nigeria Cartons to help cut dollar debt and raise R1.9bn ($128.9m).
The largest issue has been Zimbabwe, where it has incurrred a net devaluation loss of R1bn ($67.8m). The devaluation of the Angolan kwanza has cost Nampak R212m ($14.m). Also in Angola, a change in tax law limited the deductibility of fx losses to 7%, significantly impacting the group’s tax charge.
Nampak has also faced challenges with currency volatility in Nigeria although its Bevcan business there has achieved h double digit market share gains and increased sales volumes. Nampak is looking to expand its production facility in Nigeria to drive sales in West Africa.
In its core South African market, Nampak managed to retain a market share in excess of 80% in the beverage can market, despite the entry of two new competitors.
Trading profit declined 21% to R1.6bn ($108.7m) and margins dropped from 12.3% to 10.6%. Several of its operations in rest of Africa also reported lower trading profits due to challenging economic conditions. Nampak generated an operating profit of R2.1bn ($142.7), before the net foreign exchange losses in Zimbabwe, up by 35% due to improved cost control. Net devaluation in Zimbabwe meant operating profit fell by 84% to R254m ($17.3m). Profit before tax fell to R6m ($0.41m).
Nampak’s CEO André de Ruyter had already announced before today he would be leaving to join troubled power utility Eskom. Under his tenure since 2014, Nampak’s valuation has gone from R29bn (then $2.7bn) to R5bn ($380.4bn).
