Hunyani Holdings Limited, the country’s largest printing and packaging company, has reported it has failed to reopen its Pulp and Paper division in Norton and consequently impaired its assets for the full year ended October 31, 2010, incurring a loss of $2,6 million.
Hunyani’s ongoing operations include Corrugated Products, Flexible Products, Printopak, Forest Estates, Pulp and Paper, Associates Softex and Waste Collections.
In an abridged financial report, the printing and packaging company said the group’s pulp and paper mill remained under care and maintenance during the period under review, but managed to embark on a voluntary retrenchment programme to reduce recurrent costs at the division.
The plant was closed two years ago.
In the new year, Hunyani plans to spend $3,3 million on phase two of its refurbishment and restructuring projects to take the group’s operations back to optimality.
The first phase was completed last year at an outlay of $1,9 million largely financed from earnings from the sale of the group’s non-core assets.
The disposal raised $1,3 million, all of which was committed to restructuring and refurbishments.
“Capacity utilisation should increase significantly and result in improved economies of scale. Margins are expected to improve as the benefits of the restructuring and refurbishment project are realised. Growth prospects are, therefore, encouraging for 2011,” said Keith Nicholson the company secretary.
For the full year, the group reported that operating profit rose marginally to $787 678 from $710 643 the year before.
Total revenue also increased to $35,3 million from $23,3 million in 2009.
During the period under review overall volumes grew by 22% compared to last year with Corrugated Products, Flexible Products, Printopak, Associates Softex and Waste Collections reporting volume growth.
“Competition from imported products was intense. Liquidity challenges persisted and impacted negatively on manufacturing sector’s ability to increase capacity. Packaging demand firmed on the back of an increased tobacco crop and improved economic prospects,” Hunyani said.
The group said it remained borrowed throughout the trading period.