Pride Mzarabani
HARARE – Nampak Zimbabwe has released its trading update for the third quarter and nine months ended June 2024, revealing a complex landscape of revenue and volume performance amid ongoing economic challenges.
The company reported a 2% increase in overall group volumes for the third quarter compared to the same period last year. This growth comes despite significant hurdles, including tight liquidity conditions following the introduction of the new ZWG currency on April 5, 2024. The liquidity issues particularly impacted product lines such as HDPE and commercial cartons, which experienced a slowdown in demand due to increased competition and market pressures.
While the volume performance showed resilience, the financial results tell a different story. Group revenue for the nine months ending June 2024 was down 10% in USD terms compared to the previous year. This decline is largely attributed to the adverse effects of a drought year in FY24, which significantly impacted agricultural outputs, including a record tobacco crop that had benefited the company in FY23.
In the Cartons, Labels, and Sacks Division, sales volumes were down 3% year-on-year, primarily due to reduced demand for tobacco paper wrap. Conversely, other commercial packaging saw a 7% increase, driven by improved demand. The Plastics and Metals segment reported mixed results, with Mega Pak achieving an 11% increase in sales volumes, bolstered by strong demand in the preforms category. However, CarnaudMetalbox faced a 4% decline in sales volumes, with metals performing well but plastics suffering from liquidity challenges among major customers.
The company remains focused on cost containment measures to preserve margins and improve profitability across all business segments. The outlook remains uncertain, with the operating environment continuing to be strained by liquidity challenges and power shortages affecting operations.
As Nampak Zimbabwe navigates these complexities, the management emphasizes the importance of adapting to market conditions and maintaining a strategic focus on growth opportunities in the face of adversity.
