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Africa Boosts Nampak’s Earnings

Africa Boosts Nampak’s Earnings


Nov 25th, 11:52

Nampak last week released its annual results for the year ended 30 September 2013.

Trading income from Africa increased by 60% to R506 million on revenue growth of 32% The Angola beverage can facility operated at full capacity for most of the year and produced very pleasing results which exceeded expectations. The trading margin in the rest of Africa improved to 18.4% from 15.1% in the previous year. Including exports from South Africa, the rest of Africa now accounts for 36% of the group’s total trading profit.

Nampak recently announced the acquisition of the Alucan beverage can operation in Nigeria for US$301 million and Board approval has been granted to install a 2nd beverage can line in Angola for US$100 million. These major investments will further contribute to growing the group’s earnings from the Africa continent outside South Africa where it currently has operations in 12 countries generating revenue of almost R3 billion per annum.

Nampak has also been granted an option to purchase a leading rigid plastics company in Nigeria.

Group revenue increased by 11% to R18.3 billion and operating profit from continuing operations increased by 8% to R1.9 billion. The trading margin at 10.5% was marginally below last year.

Earnings per share increased by13% and headline earnings per share increased by 8%. The final dividend was increased by 10% to 98.0 cents per share making a total of 140.0 cents for the year which was an increase of 8% on last year.

CEO Andrew Marshall said, “Investing in Africa has proved to be the right strategy for us and we are excited by the many growth opportunities. Apart from the new beverage can factory in Nigeria and the additional beverage can line in Angola, we are also exploring a number of other growth prospects. South Africa continues to be the major profit contributor to the group and we will also continue to invest in our core businesses where we are the leaders in a number of market segments. This is evidenced by the substantial capital expenditure undertaken during the year.
The first aluminium beverage can production line in South Africa was commissioned during the year and we are on track converting other lines at our Springs factory to aluminium from tinplate. Aluminium beverage cans are already available in the market. Construction of the third glass furnace at our Roodekop factory is underway and will be commissioned during the latter part of 2014.

Sales of beverage cans increased significantly during the year but margins were impacted by lower average selling prices agreed as part of the group’s strategy to secure long-term contracts with major customers. Margins in the glass business were similarly affected. The food and diversified canning business experienced slower sales on the back of weak consumer demand.

The paper businesses were affected by reduced demand and margin pressure resulted in lower trading profits. In the plastics businesses revenue was up but trading profits were slightly below last year again due to pressure on margins.

The plastic milk bottle business in the United Kingdom performed well in Pound terms and trading profit improved on marginally lower sales as a result of very good cost-control. Sales of the Nampak-patented lightweight Infini bottle exceeded 250 million units.

The group return on equity was 22% and net debt to equity decreased to 22%. The group is well-placed to pursue growth opportunities.”

Ahead of his impending retirement at the end of March 2014, Andrew Marshall said, “Nampak has strong positions in the metals, glass and plastics markets in South Africa and there are tremendous growth opportunities in Africa. I remain very bullish on the group’s outlook in both South Africa and Africa.”

Nampak announced on 14 October 2013 that André de Ruyter has been appointed a director and CEO designate as from 1 January 2014 and will take over from Andrew Marshall on 1 April 2014. 

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