Forex auction delays creating imbalance in supply chain: Nampak

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HARARE – Listed packages manufacturer, Nampak Zimbabwe says while there has been an improvement in foreign currency availability through the auction system and from customers, limitations and delays in disbursements continued to have the effect of creating imbalances within the supply and customer delivery chain.

The auction system has a backlog of up to four to five weeks currently.

Nampak said foreign currency, although still inadequate for the group’s operations as a whole, was more available in the quarter to June 30, 2021. An increase in trading volumes was seen although performance was impacted by the effects of high inflation, as well as lower margins due to increased competition.

Revenue for the third quarter under review was 37% ahead of prior year quarter in inflation adjusted terms and 234% in functional currency. The cumulative revenue in inflation adjusted terms for the nine month period was 26% ahead of prior year period and 336% above the same period in historical terms. This was due to growth in sales volumes and adjustment of selling prices to reflect the economic trends.

Managing director John Van Gend said the availability of raw materials remained challenging.

The group units traded profitably in the period and net working capital is positive. The group had a cash holding of $528 million at the end of the third quarter and this is being used to reinvest in raw materials and settlement of trade payables.

Capital expenditure of $128 million relates mainly to projects carried forward
from the previous financial year. Various projects remain under consideration
subject to availability of foreign exchange.

At Hunyani Paper and Packaging, volumes were 38% up for the quarter and 23%
ahead for the nine months compared to the prior year period. Volumes in the commercial sector grew by 63% on prior year nine month period led by improved demand and ongoing customer recovery.

The tobacco sector was 4% below the prior year nine month period due to the lower tobacco crop last year and the delayed start to packing this year. The year to date decline in the export market was 19% due to COVID-19 impacts in regional markets.

Mega Pak volumes increased60% in the quarter and by 59% for the nine months due to
increased demand across all areas of the business. The improved volumes continued in the beverage manufacturing sector, which contributed to increased preforms volumes. Large injection moulding also continued to perform well.

However exports into the region remained subdued as regional economies were affected
by the pandemic.

CarnaudMetalbox volumes grew by 69% and 23% for the quarter and the nine months respectively, compared to the previous periods. Cumulative metal volumes were up
7% with food can and crowns leading the recovery despite a shortage of tinplate.

Plastics performance was mixed, with higher HDPE bottle volumes 52% ahead of
the previous year being off-set by a decline in injection closure volumes, which
were 8% below the prior period.

Going foward, Van Gend said the fourth quarter performance is likely to be impacted by the recent disturbances in South Africa, which may affect supply chain logistics and also by the bottlenecks in the global supply chain.

 

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