Bloomberg News

Nampak First-Half Profit Falls as South Africa Unit Falters

May 27, 2014

Nampak Ltd. (NPK), Africa’s biggest manufacturer of beverage cans, said first-half profit fell 6 percent as weaker trading in its home market of South Africa offset growth in the rest of the continent.

Net income for the six months through March fell to 729.3 million rand ($69.9 million) from 775.2 million rand a year earlier, the Johannesburg-based company said in a statement today. The profit margin in South Africa declined to 8.5 percent from 9.1 percent a year earlier, compared with a total margin of 11 percent.

“We cannot rely on underlying economic growth for us to deliver bottom-line growth for our South African business,” Chief Executive Officer Andre de Ruyter said by phone today. “We have to optimize and improve our fundamental business processes of procurement, manufacturing as well as marketing in order to unlock additional value.”

Nampak, a supplier to global drinks companies SABMiller Plc (SAB) and Coca-Cola Co. (KO:US), is expanding in Africa outside its home market through acquisitions and upgrades to existing facilities. South Africa’s economy contracted for the first time since a 2009 recession in the first quarter, the statistics office said today.

Capacity Growth

“Markets that show really good growth are the beverage-can market in Angola as well as markets in Nigeria,” de Ruyter said. The company bought Nigerian packaging company Alucan in February for $301 million and retains an option to add a plastics manufacturer. In Angola, Nampak plans to add 1 billion cans of capacity to its existing 770 million cans, according to de Ruyter.

Nampak shares fell 3.6 percent to 35.80 rand at the market close in Johannesburg, the biggest loss in almost four months. That extended their decline for the year to 13 percent. The company raised its interim dividend 10 percent to 0.46 rand per share.

Nampak has plants in 12 countries, manufacturing packaging materials from metals, glass, paper and plastics, according to its annual report. First-half revenue increased 12 percent to 9.8 billion rand, including a 9 percent gain in South Africa and 24 percent in other African countries.

To contact the reporters on this story: Neo Khanyile in Johannesburg at nkhanyile@bloomberg.net; Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: Gordon Bell at gbell16@bloomberg.net John Bowker, Tom Lavell


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