Angola emerges as a key growth driver for Nampak while its diversified business comes under pressure

Nampak reported mixed interim results on Friday as stronger performances from its beverage operations in South Africa and Angola were offset by weakness in its diversified packaging business.

The packaging group said weaker fish and fruit volumes, business losses in aerosol cans and bottle-cap packaging operations, lower exports and customer-related packaging disruptions weighed on earnings during the six months to end-March.

Revenue was 1% lower at R5.6bn, while normalised earnings before interest, tax, depreciation, and amortisation (ebitda) decreased 6% to R816m.

Normalised headline earnings increased 9% to R346m, helped by lower finance costs and stronger contributions from its beverage businesses.

The group’s diversified South Africa division was the main pressure point during the period, with revenue 18% lower at R1.4bn and ebitda down 44% to R131m. Nampak said some of the business losses in the division were structural in nature.

By contrast, Beverage Angola delivered strong growth, with revenue increasing 30% to R664m and ebitda rising 28% to R187m.

The performance was supported by improved economic conditions in Angola, higher consumer demand and regional export opportunities, though management said a stronger rand and intermittent material shortages partly offset gains.

Impairment reversal

The stronger outlook for the Angolan business resulted in a R319m impairment reversal during the period.

Beverage South Africa reported more modest growth, with revenue increasing 5% and ebitda rising 4% to R533m.

The division contended with lower exports and raw material supply disruptions during the period.

Nampak said changing consumer preferences continued to support demand for value-pack formats, ready-to-drink beverages and energy drinks.

The company is relocating a can manufacturing line from Angola to its Springs operation in South Africa to increase production flexibility and capacity. The project is expected to be completed by September 2026.

Operating profit before impairment reversals was 39% lower at R580m due to weaker contributions from diversification as well as adverse movements in capital items.

Net finance costs fell 33% to R189m as the group continued reducing debt after asset disposals and lower working capital requirements.

Net debt excluding leases dropped 30% to R2.2bn, while the group’s gearing ratio improved to 69% from 149% a year earlier.

Nampak said discussions regarding the disposal of its 51.43% stake in Nampak Zimbabwe were continuing. An exit from Zimbabwe would reduce debt and lower exposure to risks associated with operating in the country.

The group recorded an R114m loss from discontinued operations, compared with a R2.5bn profit in the last period, which had been boosted by accounting gains linked to the disposal of Bevcan Nigeria.

Looking ahead, Nampak said the beverage category was expected to remain relatively resilient despite subdued economic conditions and inflationary pressure.

No interim dividend was declared. By 9.45am on Friday, the company’s share price was up 1% to R482.79.