Wiseman Khuzwayo

Nampak is looking to expand elsewhere in Africa to offset slower growth at home, where consumer spending has been blunted.

The packaging company cautioned yesterday that South Africa, which contributed three-quarters of its revenue last year, would “remain challenging” in the near future.

Half-year results showed it grew revenue by 12 percent to R9.795 million. The South African operation increased revenue by 9 percent, the rest of Africa by 24 percent and the UK by 22 percent in rand terms.

The dividend was increased 10 percent to 46c while headline earnings a share from continuing operations rose by 9 percent to R1.214 as a result of the improvement in trading profit and a reduction in the effective tax rate.

The group said there was good demand for beverage cans, with the 440ml can contributing most to the volume growth. The conversion of beverage cans from tinplate to aluminium was well advanced.

Nampak said demand for corrugated boxes from the agricultural sector was hurt by poor weather conditions in the Western Cape and was only partially offset by market share gains in the commercial sector, where conditions were weak during the period.

Approval by the competition authorities for the sale of its cartons and labels business was still awaited.

Trading profit in the rest of Africa increased by 23 percent (compared with a 10 percent increase in overall group trading profit) on a further improvement in performance from Angola and from both the metals and paper operations in Nigeria.

Malawi had a good six months on increased tobacco box sales, but Zambia’s performance was hurt by a shift to alternative forms of packaging.

Trading profit in constant currency terms in the UK declined 14 percent to £3.6m (R62.6m) as a result of higher pension fund costs.

The chief executive of Nampak, André de Ruyter, said that although manufacturing figures from South Africa had been low, a business should do well if it managed costs and managed its relationship with labour and raw material suppliers well.

He said Nampak continued to run a small business in Zimbabwe “although conditions are very challenging”.

“We are going forward optimising the base business. We will move more quickly in the rest of Africa, where we are pursuing further expansion plans. A second beverage can plant is lined up in Angola and another in Nigeria.”

Daniel Isaacs, an analyst at 36One Asset Management, said the results were a bit light. African growth seemed decent but the rand had weakened significantly against some of the African currencies, which would have boosted the number. The results were also flattered by a lower tax rate.

Nampak shares declined 3.63 percent to close at R35.80.