Nampak Zimbabwe Limited, listed on the Zimbabwe Stock Exchange under the share code NPKZ, is a producer and advertiser of packaging products such a plastic, paper and metal packaging. In addition, the company has interests in renting natural resources and a timber handling plant.

The following is an excerpt from the abridged audited results:

COMMENTARY

OVERVIEW

The industrial sector continued to face serious difficulties as a result of the acute foreign exchange constraints which impacted on raw material procurement.

Nevertheless, sales to the Group’s customer base recovered considerably, as demand improved during the year, which contributed to an enhanced performance. Generally, the Group’s performance could have been significantly better, but, was constrained as foreign exchange availability remained well below the Group’s requirements. The tobacco season outperformed last year and this also contributed to the good results.

A consequence of the lack of foreign exchange was that the South African shareholder reviewed, and subsequently limited, their support at the commencement of the third quarter thereby curtailing their escalating exposure.

GROUP PERFORMANCE

Revenue for the year amounted to $116,8 million (2017: $96,3 million), an increase of 21.3% on the prior year. This resulted in an increased operating profit of $14,5 million (2017: $7,6 million) driven by both volume growth and tight cost control. Tight control over inventory and trade receivables, combined with a significant increase in trade payables primarily due to committed inventory purchases funded by the controlling shareholder on a trade loan basis contributed to year-end cash balances

accumulating to $84,5 million (2017: $48,2 million).

OPERATING UNITS

CarnaudMetalbox

Volumes and net revenue improved against the prior year as demand recovered, particularly from the beverages sector resulting in operating profit being substantially up on the prior year.

Hunyani

Volumes and net revenue for the operating divisions improved from the prior year as demand for commercial packaging continued to rise. Performance in the tobacco carton sector was solid. The resultant operating profit was substantially ahead of the prior year, spurred by the higher volumes and overhead cost containment.

Mega Pak

Volumes and net revenue were significantly up on prior year led by a recovery in demand from major customers, growth in exports to the Democratic Republic of Congo and capacity enhancements with operating profit well ahead of the prior year.

Softex Tissue Products (Associate)

Softex traded profitably.

CAPITAL EXPENDITURE

The consolidated capital expenditure amounted to $8,3 million (2017: $2,8 million). The expenditure was incurred to address security of tenure for Mega Pak and to enhance plant capacity. Mega Pak’s acquisition of its rented property for $3,3 million and the installation of a new PET blower, including moulds, to expand their preform manufacturing capacity was a significant portion of the capital expenditure. At CarnaudMetalbox, the expenditure included new moulds for the 1,5 liter Chibuku bottle and closures and upgrades to the food can lines to improve can stackability. A new replacement board machine stacker was commissioned at Hunyani.

OUTLOOK

The difficulties currently being experienced in the economy have made business more challenging than at any time in the recent past. Domestic inflationary pressures are building up and are likely to erode some of the consumer demand gains made in the past year. Unless appropriate policies are implemented that resolve the underlying economic problems, it is possible that in the year ahead there may be a contraction of the economy, which could impact on manufacturing output.