Nampak Q1 revenue plunges 23%

Nyashadzashe Ndoro

Chief Reporter

Nampak Zimbabwe Limited has reported a 23% year-on-year decline in group revenue for the first quarter ending December 31, 2024, expressed in USD terms.

The company attributed the decrease to reduced demand across all business units, intensified competition, and macroeconomic challenges. Trading profit also saw a significant drop of 56%.

The company highlighted several factors impacting its performance. Fluctuations in exchange rates and the continued disparity between official and parallel market rates, while narrowing, still presented challenges.

Power supply disruptions, particularly at the Ruwa plant, hampered production, though the company has since installed additional generator capacity.

Supply chain issues, including delays at Beira Port due to political unrest in Mozambique, further complicated operations and impacted delivery capabilities during the festive season.

Nampak also noted increasing competitor activity, especially in the commercial segment, and the broader macroeconomic environment, which is impacting demand as wholesale and retail sectors face business closures.

Despite the revenue decline, Nampak managed to maintain its gross profit margin compared to the previous year.

However, the trading profit margin decreased by 9%, largely attributed to hyperinflation accounting effects in the prior year's comparative period. The company transitioned to USD reporting on April 1, 2024.

Performance varied across the company’s segments. Within the Printing and Converting segment, the Corrugated Products Division experienced a 35% sales volume decline due to heightened competition and reduced carry-over orders from tobacco merchants.

Conversely, the Cartons, Labels, and Sacks Division saw a 4% sales volume increase, driven by a recovery in commercial sales.

The Plastics and Metals segment also faced challenges. Mega Pak volumes were down 13% due to power disruptions, leading to increased operational costs and plant breakdowns. Carnaud Metalbox reported a 7% sales volume decrease, primarily due to raw material shipping delays impacting metals volumes, though the company expects these materials to arrive early in the next quarter.

Plastic volumes were slightly below the prior year due to customer liquidity challenges.

The company continues to operate under a cautionary notice regarding the pending disposal of Nampak Southern Africa Holdings Limited’s shareholding in the group to TSL Limited. There were no changes to the directorate during the quarter.