Nampak suspends dividend payout after profits drop
The group said yesterday that the board decided not to resume dividends until the sustainability of cash transfers from Zimbabwe were assured and the disposal of the glass business was finalised.
Chief executive André de Ruyter said on Thursday that currency volatilities and a 37 percent decrease in cans demand in Angola slashed its revenue by more than a third.
De Ruyter said costs increased as its can and plastic divisions in South Africa and the UK came under pressure.
He said the first half has been challenging for its key businesses, with demand weakening on constrained consumer spending across the continent.
“Significant currency volatility and difficult macroeconomic conditions, particularly in Angola, held back performance,” De Ruyter said.
The group said Bevcan Angola volumes decreased 37 percent and revenue by 33 percent as a result of the lower demand, driven by lower wages relative to producer price index inflation in Angola.
It said the volumes came under pressure as the Kwanza had devalued by 49 percent since the end of March last year.
De Ruyter said this eroded disposable income and put consumption under pressure.
“As Angola's contribution to profits reduced, swift cost containment measures, including a 20 percent reduction in headcount in that country, were implemented."
Nampak expects demand in Angola to recover in the next 12 to 18 months once wage inflation has an effect,” he said. Revenue declined 4 percent to R8.45 billion while profit eased 9 percent to R795 million and headline earnings per share fell by 9 percent to 119.7 cents a share.
The group said negotiations were ongoing with a South African majority black-owned business which had secured funding for 100 percent of the anticipated divestiture value.
The metals division was hit hard with trading profit declining by 21 percent to R725m and plastics trading profit was down by 5.79 percent to R114m.
The paper business increased its trading profit by 20.51 percent to R94m, supported by a strong demand in Zimbabwe. However, the share price gained more than 3 percent to R10.66 in early trade from Wednesday’s close of R10.25.
Nampak closed 3.41 percent higher at R10.60 on the JSE on Thursday.