Nampak says FY sales fall across the board

By The Standard | Dec. 16, 2019 | 3 Min read

NAMPAK Zimbabwe Limited (NZL) sales fell across its printing/converting and plastics/metals segments owing to foreign currency scarcity and rising inflation in the financial year ended September 30, 2019.

BY TATIRA ZWINOIRA

In its trading update for the year ended September 30, 2019, NZL said volumes were generally lower across all local sectors of the business.

“Local sales decreased, although export volumes increased due to higher demand for tobacco packaging in Malawi and unexpected orders from Mozambique,” NZL said in a statement accompanying its trading update for the period under review.

“The introduction of SI (Statutory Instrument) 142 compounded the difficulties of sourcing foreign currency, which is vital to import various raw materials, particularly paper for conversion to tobacco boxes. Demand remains reasonable across the product portfolios, but supply continues to be hampered by the lack of raw materials.”

NZL complained that the foreign currency meant for their suppliers were being held at the central bank.

“In line with the Exchange Control Directive RU 102 dated 25 June 2019 and the Exchange Control Circular No 8 of 2019, the blocked funds previously held in the Non-Transitory Foreign Currency Account were transferred to the Reserve Bank of Zimbabwe after year-end,” NZL said.

“Additional blocked funds covering foreign creditors outside the agreement were also remitted pre and post-year end to the Reserve Bank of Zimbabwe.”

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Under the NZL’s printing and converting segment, it operates the Hunyani Paper and Packaging company where the group saw volumes for the full year decline by 8% compared to the prior year.

Local commercial volumes declined 54%, however, these were mitigated by improved local tobacco packaging volume growth of 34% due to a higher crop size.

“Furthermore, exports grew by 65% on prior year, driven by tobacco packaging exports to Malawi and ad-hoc orders from Mozambique. The commercial segment experienced a loss of volumes due to pricing challenges and a decline in the cartons segment due to raw material sourcing limitations,” NZL said.

Regarding its plastics and metals segment, NZL operates Carnaud Metalbox, the sole supplier of metal cans, crowns and aerosols in Zimbabwe as well as Mega Pak, a plastic packaging firm.

In the period under review, Carnaud Metalbox volumes for the full year, declined 40% compared to the prior year due to depressed demand.

For Mega Pak, the full year volumes declined 27% which was also due to falling consumer demand in the beverage and cordials sectors with NZL suffering from raw material supply constraints.

NZL said the groups capital projects of $3,5 million, the majority of which were carried forward from the prior financial year, were spent largely on replacement machinery.

“The trading environment facing the Group and the manufacturing sector as a whole remains challenging. It is unlikely that any meaningful relief will be forthcoming until the critical constraints of foreign exchange and power supply are eased and that there is a return to a more market managed economy,” NZL said.

Due to the adoption of International Accounting Standard (IAS 29) adopted by the Public Accountants and Auditors Board that gives guidance for hyperinflationary accounting, NZL has delayed the publication of its audited financial statement for the period under review.