Nampak mulls offloading Zim operations as sales vo...

Nampak mulls offloading Zim operations as sales volumes decline 14%

Staff Reporter

Nampak Zimbabwe Limited, a leading packaging company in Zimbabwe, is considering selling its Zimbabwean assets as part of its turnaround strategy.

This move comes after the company announced its Nigerian exit after signing a US$68.5 million deal to dispose of Bevcan Nigeria. Additionally, the company plans to dispose of its South Africa liquid cartons business for R450 million.

In Zimbabwe, the company's half-year 2024 interim report reveals that the economic environment remains uncertain, with power outages and policy changes affecting operations. Despite these challenges, the company has managed to maintain profitability, with an operating profit of ZWL$522.3 billion, 32% ahead of the prior year.

However, the company's Zimbabwean operations have been impacted by the reduced tobacco crop size and lower demand. Sales volumes for the period were 14% below prior year, with regional demand also lower due to the drought and loss of volume to competitors.

The Zimbabwe Stock Exchange listed packaging company is evaluating other projects to maintain or improve capacity, including expansion projects and improved generator capacity at Megapak.

However, the directors have decided against declaring an interim dividend to conserve available cash for capital expenditure.

The outlook remains challenging, with the economy impacted by lower mineral prices and reduced agricultural output. However, the company anticipates remaining profitable through to year-end, despite potential raw material supply chain disruptions.

"We are pleased to report that all business units continued to trade profitably, with a sustained focus on generating positive cash flows and funding capital projects with shorter paybacks in order to increase plant capacity," said Group Managing Director, John Van Gend.

The company's decision to sell its Zimbabwean assets is part of its strategy to focus on its core metals business and settle its debt pile.

The move is expected to unlock shareholder value and position the company for future growth.