Diversified packaging company Nampak has stopped the disposal of its crates and drums business.
DURBAN - Diversified packaging company Nampak has stopped the disposal of its crates and drums business after restructuring and securing a contract from a major soft drinks manufacturer for a period of three years.

Last year the group announced it was selling the crates and drums business and in the year to end September 2018 it reported the business as a discontinued operation.

However, in the 11 months to end August trading update released yesterday, the group said: “The upside potential of this operation, as a result of the new contract and a restructuring of the business to reduce labour cost, has resulted in the crates and drums businesses being withdrawn from a proposed disposal process."

The business is housed under the Plastics South Africa division.

However, the group said the overall Plastics South Africa division continued to experience lower sales volumes in a tough trading and economic environment in the country.

But it added that a new and focused senior management team for this division was now fully staffed and operational efficiencies had improved at the liquid bottles business at its Isando plant after the consolidation of its Industria operations into this plant.

However, Metals South Africa results were expected to be moderately down due to Divfood experiencing a challenging year.

South Africa's economy recorded a 3.1percent growth in the second quarter of 2019 after declining in the first quarter of the year.

“While this is positive, gross domestic product (GDP) growth forecasts were revised downwards mid-year and average GDP growth was expected to be less than 1percent for 2019.

"This is reflective of ongoing difficult trading conditions for the majority of retailers and consumer goods companies resulting from constrained consumer spending and sensitivity to pricing,” the group said.

However, its beverage can market continued to grow in excess of GDP growth, lessening the impact of new entrants on Bevcan’s market share.

In Angola the group is experiencing weak demand in the beverage can market as consumers’ disposable income remains under pressure after devaluation of the kwanza, resulting in a 1.2 percent contraction in GDP in 2018.

Nampak will release its results on or about November 27.