Nampak prepares investors for a loss


Nampak will report a full-year loss due to the impact of Covid-19 on its operations, big impairments and foreign currency movements.

In a trading statement, the packaging group said Covid-19 affected trading conditions over the year to end-September with the result that it booked impairments totalling R4 billion. These consisted mainly of a R2.2 billion goodwill impairment of its Bevcan Nigeria business and a R1.2 billion asset impairment in Angola.

Net devaluations losses arising from Angolan and Nigerian exchange rate movements, together with the net impact of the Zimbabwe currency devaluation and hyperinflation amounted to R588 million. It recorded a net loss of R141 million on the disposal of business and property, while retrenchment and restructuring costs came to R135 million. These were partly offset by insurance proceeds of R83 million for asset replacements.

It expects to report a headline loss from continuing operations of between 73.6c and 80.6c per share for the year, down from headline earnings of 54.1c last year. Its loss per share is expected to be between 571.1c and 624.6c compared to earnings of 42.2c previously. Headline earnings exclude capital profits and impairments but include foreign exchange losses.

The company made a net profit from discontinued operations of R369 million primarily from the disposal of Nampak Plastics Europe during the year compared to a net loss from discontinued operations of R1.12 billion in the prior year.

In a trading update at the end of September, Nampak said it had cut debt, won new export contracts and remained cash positive despite the impact of Covid-19 on its businesses. Although it was designated as an essential services provider under the lockdown regulations, it was affected by reduced consumer demand, the shift by customers to preserve cash and the ban on alcohol sales and social gatherings for much of the period, which impacted overall volumes.

The group used the R1.4 billion in proceeds from the sale of its Glass business and $16 million from Cartons Nigeria disposal to reduce its dollar debt by $100 million. It also focused on optimising working capital and conserving capital expenditure, with the result that it continued to be cash positive throughout the period impacted by the pandemic.

The results are scheduled for release on 1 December.

Nampak’s shares jumped 15% to R1.80 yesterday. The trading statement was released after the market close.

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