Packaging manufacturer Nampak delivered a mixed set of interim financial results for the six months ended March, as strong performances from its beverage businesses in South Africa and Angola helped offset mounting pressures in other parts of the group.
While beverage operations continued to generate growth, challenges across several packaging segments weighed on revenue and profitability, highlighting the uneven recovery within the company’s portfolio.
Revenue Slips as Operational Challenges Affect Performance
The group reported revenue of R5.6 billion, representing a modest 1% decline compared with the same period last year.
Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) fell 6% to R816 million as weaker trading conditions in parts of the business impacted overall earnings.
Nampak attributed the decline to several factors, including reduced fish and fruit packaging volumes, losses in aerosol can and bottle-cap operations, lower export activity, and customer-related disruptions that affected packaging demand.
Headline Earnings Rise Despite Softer Operating Conditions
Although operating performance came under pressure, the company recorded a 9% increase in normalised headline earnings, which rose to R346 million.
The improvement was largely driven by lower finance costs and stronger contributions from the group’s beverage divisions, helping to counterbalance weaknesses elsewhere in the business.
Management said ongoing efforts to streamline operations and reduce debt also contributed to improved earnings resilience.
Diversified South African Business Emerges as Main Concern
The group’s diversified packaging operations in South Africa were the biggest drag on results during the reporting period.
Revenue in the division declined 18% to R1.4 billion, while EBITDA plunged 44% to R131 million.
According to Nampak, some of the business losses experienced within the segment are structural in nature, suggesting that certain challenges may persist beyond the current financial year.
The division continues to face pressure from changing market dynamics and reduced demand in several packaging categories.
Angola Delivers Strong Growth and Improved Outlook
In contrast, Nampak’s Angolan beverage business posted one of the strongest performances across the group.
Revenue surged 30% to R664 million, while EBITDA increased 28% to R187 million.
The growth was supported by improving economic conditions in Angola, stronger consumer spending, and increased opportunities for regional exports.
Management noted that gains were partially tempered by a stronger South African rand and periodic shortages of production materials, but overall trading conditions remained favourable.
Stronger Prospects Trigger Significant Impairment Reversal
Confidence in the long-term prospects of the Angolan operation led Nampak to reverse a previous impairment charge worth R319 million.
The reversal reflects management’s improved assessment of the business’s future earnings potential and market position.
The development provided an additional boost to the company’s interim financial performance.
South African Beverage Unit Maintains Steady Momentum
Nampak’s beverage business in South Africa also recorded positive growth, although at a more moderate pace than its Angolan counterpart.
Revenue increased by 5%, while EBITDA climbed 4% to R533 million.
The division faced challenges from lower export volumes and disruptions in raw material supplies but continued to benefit from changing consumer preferences.
Demand remained strong for value-pack products, ready-to-drink beverages, and energy drinks, categories that continue to expand across the market.
Manufacturing Expansion Planned for Springs Facility
As part of its long-term production strategy, Nampak is relocating a can-manufacturing line from Angola to its facility in Springs, South Africa.
The move is designed to increase production flexibility, improve capacity utilisation, and strengthen supply capabilities within the region.
The project is expected to be completed by September 2026.
Debt Reduction Efforts Deliver Financial Improvement
Despite weaker operating profit, Nampak continued to make progress in strengthening its balance sheet.
Operating profit before impairment reversals declined 39% to R580 million, reflecting weaker contributions from the diversified packaging business and adverse movements in capital items.
However, net finance costs fell 33% to R189 million as a result of lower debt levels, asset disposals, and reduced working capital requirements.
Net debt excluding leases decreased by 30% to R2.2 billion, while the company’s gearing ratio improved significantly to 69%, compared with 149% a year earlier.
Zimbabwe Exit Remains Under Consideration
Nampak confirmed that discussions surrounding the sale of its 51.43% shareholding in Nampak Zimbabwe are still ongoing.
Management believes a disposal would further reduce debt and limit exposure to economic and operational risks associated with the Zimbabwean market.
The potential transaction remains part of the company’s broader strategy to simplify operations and improve financial stability.
Loss From Discontinued Operations Impacts Results
The group recorded a loss of R114 million from discontinued operations during the reporting period.
This compared with a profit of R2.5 billion in the previous comparable period, which had been significantly boosted by accounting gains arising from the disposal of Bevcan Nigeria.
The sharp swing highlights the absence of major one-off disposal benefits that supported earnings in the prior year.
Outlook Remains Focused on Beverage Resilience
Looking ahead, Nampak expects its beverage operations to remain relatively resilient despite continued economic uncertainty and inflationary pressures across key markets.
The company did not declare an interim dividend, opting instead to maintain focus on operational improvements and debt reduction initiatives.
Investors responded cautiously to the results, with Nampak’s share price trading slightly higher, rising about 1% during Friday morning trading.
