Nampak to report higher earnings

Packaging group Nampak expects to report higher full-year earnings after it returned to profitability at the halfway stage of the financial year.

The group said on Wednesday it expected to report headline earnings per share (HEPS) from continuing operations for the year ended September of 3,100c-3,500c compared with a headline loss of 39,004.6c a year ago.

For total operations, it expects to report HEPS of 1,250c-1,450c after a headline loss of 46,811.7c in the 2023 financial year.

During the year, Nampak classified various assets as held for sale and discontinued operations in keeping with the asset disposal programme that started in August 2023.

In the 2023 financial year, the group suffered a net loss of R4bn, with forex losses in Nigeria where the naira depreciated sharply against the dollar, resulted in a surge in costs for raw materials.
Net interest costs also increased substantially, reflecting the rising interest rate environment and costs associated with the refinancing of Nampak’s funding package.

The group returned to profitability in the first half of the current financial year, reporting a headline profit of R447m.

Nampak CEO Phil Roux said at the interim stage that this was driven by a step change in the performance of the continuing metals business, a cost reduction programme, lower impairment losses, improved working capital management and progress on asset disposals.

In October, the group announced the sale of its 51.43% holding in Nampak Zimbabwe to Zimbabwe Stock Exchange-listed TSL for $25m.

The sale is in line with its asset disposal plan, and would contribute to the reduction of the group’s net debt and eliminate the associated risk and volatility of the Zimbabwean economy.

The proceeds would be applied towards the further settlement of debt.

In September, Nampak said it had successfully concluded its refinancing with Standard Bank, having met the deadline by its lenders to return R720m in net debt from disposals by the end of the same month.

The company said this had resulted in a significantly simplified funding structure, inclusive of only a minor foreign debt component.

Since 2023, under CEO Phil Roux, the JSE-listed packaging manufacturer has implemented a comprehensive turnaround plan, including board and management changes, a business model review, a capital and debt restructuring programme, a rights offer and a new strategy focused on its core metals business.

The market was expecting more from Nampak, with its share price tumbling the most since early 2023, down 12.5% to R400.76.

With Michelle Gumede

MackenzieJ@arena.africa