NAMPAK Zimbabwe Limited experienced a 56,62% drop in profit after tax to $838 000 on the back of depressed demand in the plastics and metals segment through their subsidiaries.
BY TATIRA ZWINOIRA
In its financial results for the six months ended March 31, Nampak said its subsidiaries both Carnaud Metalbox (CMB) and Megapak Zimbabwe recorded 23% and 34% drop in revenue respectively.
This affected the overall business of Nampak and contributed to a drop in profit from $1,48 million recorded over the same period in 2016.
“CMB revenue was 23% below prior year. High density polyethylene (HDPE) bottles and closures sales were depressed while metal cans experienced a moderate sales improvement. As a result, an operating loss was incurred compared to the prior year operating profit. Cost containment measures including rationalisations were instituted,” Nampak Zimbabwe said.
“Mega Pak revenue was down 34% with operating profit significantly below prior year. This was due to reduced preform volumes. Cost containment measures were implemented to align costs to current activity levels. Initiatives to improve throughout are underway.”
It said the group’s revenue for the first half was 9% below the prior year to $43,09 million for the period under review from $47,57 million in the comparable last year.
The depressed demand in the plastic and metals segment was on the back of increased cash challenges, low disposable income and delays in foreign currency deals.
Cash challenges and low disposable income have meant consumers are spending less thus resulting in lower sales for distribution companies and ultimately Nampak Zimbabwe as suppliers.
On top of that, restrictions on foreign currency are inhibiting Nampak Zimbabwe’s ability to settle its foreign liabilities in a timeous way.
Megapak Zimbabwe deals with PET and HDPE bottles, crates and plastic closures while CMB does PET bottles, HDPE bottles, closures, metal cans, closures, and ROPP caps (type of bottle cap).
In response, Nampak Zimbabwe said the company would remain focused on cost containment, cash management and maintaining shareholder value.
However, the group registered a better performance in the paper segment due to import restrictions from Statutory Instrument 64 of 2016 and improved tobacco packaging demand.