Nampak’s metals business a catalyst for recovery
Nampak 2021 results have significantly improved on 2020.
Nampak’s results were driven by strong growth in the Metals division, as a result of a solid performance by Bevcan operations in South Africa and Nigeria. The restructuring of DivFood in South Africa also contributed significantly to the improvement in profitability.
Commenting, Erik Smuts, Nampak CEO, said, “Nampak had a successful financial year, driven by the recovery of all the South African metals operations, significant growth in the Nigerian beverage can market, new customers in Zambia and continued strong demand for our products in Zimbabwe.
“We successfully restructured two divisions, consolidated operations and simplified product offerings to strengthen our profitability and competitiveness. Further, we renegotiated key funding agreements to reduce financial risk and secured a R1 billion non-recourse trade facility to stabilise the balance sheet.”
Revenue increased by 24% to R14 billion driven primarily by strong results from the Metals division, as beverage can export sales to North America and strong growth in Nigeria boosted performance. Revenue from the Plastics division also grew materially due to good results from Zimbabwe and easing of pandemic restrictions in South Africa.
The strong performance was achieved against a backdrop of global supply chains shortages of raw materials as well as civil unrest in July 2021 in South Africa that led to the temporary closure of some key customers’ operations and the disruption of supply chain routes.
Trading profit improved by 109% to R1.4 billion largely as result of cost saving initiatives at DivFood, significantly improved trading conditions in South Africa, Nigeria and Zimbabwe, new customers in Zambia and restructuring at Plastics South Africa.
Revenue from the Metals division grew 26% to R9.9 billion and trading profit rose 159%. Trading profit margins improved to 11.0% from 5.4%.
Local demand for beverage cans improved in the second half with the easing of trade restrictions with higher demand for larger can sizes for beer and energy drinks. Shortages of other packaging substrates contributed to the higher demand. Performance was limited by restrictions on large group gatherings and ad hoc bans on the sale of alcohol, which remained largely in place throughout FY21. Export contracts for beverage can bodies and ends were concluded by the end of the financial year, while a new export contract has been negotiated for the supply of can ends during the 2022 calendar year.
Bevcan Nigeria experienced a surge in demand and delivered double-digit volume and revenue growth for the year, exceeding all expectations. Our manufacturing facility operated at close to capacity for the duration of FY21. An additional body maker was installed in May 2021 to increase output and accommodate higher demand. This momentum in growth is expected to continue into the coming year, albeit at a reduced rate as our production line is already operating close to full capacity.
Low demand for beverage cans continued in Bevcan Angola amid a weak economy and pandemic restrictions. ]
In South Africa, DivFood’s performance improved significantly as it successfully restructured its operations and reversed a significant loss made in the prior year. The recovery in revenue was driven by good demand for some products. During the last quarter, shipping delays and supply chain disruptions, following the social unrest in July 2021, caused raw material shortages and as a result we were unable to fully meet customer demand for food cans and metal closures.