BY TATIRA ZWINOIRA
NAMPAK Zimbabwe Limited (NZL) profit-after-tax rose nearly 460 times to $1,78 billion in its first-half financial performance ended March 31, 2020 owing to net monetary gains on hyperinflation.
In the comparative 2019 period, from the one under review, NZL recorded a profit after tax of $3,87 million.
In a statement accompanying the results for the period under review, NZL managing director John van Gend said despite the inflationary environment, all units continued to trade profitably as treasury and cash flow management remained key focus areas.
“Revenue for the half year was, in hyper-inflationary terms, 46% ahead of the prior half year as a result of inflation which boosted prices, although gross margins came under pressure in order to remain competitive,” Van Gend said.
Revenue for the period under review came in at $913,01 million, from a 2019 comparative of $624,55 million, in financial results that were inflation adjusted.
“While sales volumes were down across all sectors of business, demand remained firm across the product portfolios,” Van Gend said.
Under NZL’s printing and converting segment, the firm’s Hunyani Paper and Packaging business recorded a 28% decrease in sales volumes for the period compared to the prior year.
“The major contributor to this decline at the Corrugated Products Division was the tobacco sector which was down 43%, largely the result of increased competition from certain European Union countries in the regional tobacco case market,” Van Gend said.
“The sales volumes in the commercial segment were ahead of prior year by 8% on improved demand. The Cartons, Labels & Sacks Division remained profitable despite increased competition.”
From the plastics and metals segment, sales volumes at MegaPak declined 30% against prior year due to consumer demand contraction in the beer beverage sector, although there was some recovery in cordials.
MegaPak experienced difficulty in sourcing raw materials as regional economies remained under stress which negatively impacted on exports.
“CarnaudMetalbox: Sales volumes for the half year declined by 31% compared to the prior year period. HDPE sales volumes were affected by the decline in the scud and mahewu container offtake. The shortage of tinplate continued to impact negatively on metals volumes,” Van Gend said.
NZL saw total assets decline by 47,34% to $1,24 billion in the period under review from a 2019 comparative of $2,37 billion.
The decline was due to NZL seeing a significant drop in investments and non-current receivables to $18,36 million in the period under review, from a 2019 comparative of $380,16 million.
Further, NZL received no deferred tax on assets which it benefited from in 2019 to the tune of $593,24 million.
Van Gend said the group’s paramount concern was sourcing sufficient foreign currency to import raw materials for packaging in the period under review.
As a result of foreign currency challenges, net working capital decreased due to the funding of the legacy debts (blocked funds) transferred to the Reserve Bank of Zimbabwe.
Going forward, NZL warned that consumer demand was shrinking as incomes cannot keep pace with rising inflation, making it extremely difficult to make any meaningful forecast in the short to medium term.