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Nampak Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1968/008070/06
Share Code: NPK
ISIN: ZAE 000071676
LEI: 3789003820EC27C76729
('Nampak' or 'the group' or 'the company')
Voluntary trading update for the five months to 28 February 2021 and pre-closed
period investor call
This announcement is to update the market on the group's performance for the first five
months of the 2021 financial year.
Group financial performance largely in line with expectations, despite COVID-19
restrictions
The group showed resilience for the period despite continued COVID-19 restrictions in our
key markets. The prior year comparative period was not affected by COVID-19. The effects of
the pandemic impacted mostly the second half of the prior financial year. Against this context,
the group has delivered encouraging trading results to date. Group revenue increased 1% on
a year-on-year basis, boosted by stronger demand in Nigeria, despite softer trading conditions
resulting from the temporary alcohol ban during January in South Africa. Operating profit for
the period increased significantly, largely as a result of cost saving initiatives, the reduction in
the devaluation of monetary items in Angola and Nigeria and the non-recurrence of a loss on
the disposal of Cartons Nigeria.
Delivering on our strategy
Good advances were made in executing the group's strategy. The reduction of risk was
prioritised by reducing the group's exposure to US dollar funding and working towards a
simplified product and business portfolio. Margin improvement initiatives and fixed cost
reductions were at the forefront, supported by working capital optimisation and reduced capital
expenditure.
Cash transfers from Angola and Nigeria remain a focus area in US dollar restricted markets,
but have slowed compared to the prior year with constrained availability of foreign currency in
Nigeria.
Local demand still relatively soft, but boosted by export contracts
Bevcan South Africa experienced a partial recovery in local demand, but demand was still
lower than normal seasonal volumes. The impact of the third alcohol ban, which ended on 2
February 2021, had a delayed impact on demand and consequently performance for February
and March was negatively impacted. We have secured future can volumes through the
renewal of a major contract with no loss of allocation. The division commenced the supply of
can bodies to North America during December 2020, which helped to offset softer local
demand. In addition, an export contract for up to 500 million can ends was recently secured,
with supply commencing during March 2021. Bevcan Nigeria performed better than expected,
with double digit volume increases over the comparative period due to a recovering beverage
can market, coupled with eased COVID-19 restrictions. Bevcan Angola experienced continued
subdued demand as borders remain closed and consumers remained under pressure.
Nevertheless, profitability in Angola was marginally higher as costs were contained in line with
reduced demand. In South Africa, DivFood improved significantly as a result of cost savings
from restructuring interventions. In general, food can volumes compared favourably with prior
year except for lower than expected fish can volumes, which are expected to recover later in
the year.
Plastics South Africa performed in line with expectations, but global shortages of raw materials
and increased prices moderated the progress made on improving this division's profitability.
During the first quarter conical carton volumes in South Africa exceeded expectations, but
demand in the second quarter was negatively impacted by the third alcohol ban. Zimbabwean
operations performed satisfactorily in comparison with the prior period.
Overall performance for Paper was below expectations. While demand remained robust in
Zimbabwe, performance by this division in the Rest of Africa was limited by weaker economies
as these markets grappled with weaker trading conditions due to COVID-19 restrictions.
Debt funding covenants and asset disposals closely managed
The group's funding covenants are reported monthly to its funders and measured on a
quarterly basis for the duration of the current financial year, as required by the revised funding
agreement. As previously reported, Nampak complied with all covenants for the first quarter.
Compliance with covenants for the next measurement period, 31 March 2021, will be reported
on when the group releases its interim results on or around 28 May 2021.
Good progress was made on the group's strategic focus to mitigate balance sheet risks
through reducing the group's exposure to US dollar funding. US dollar debt now comprises
49% of the R6.1 billion gross debt, down from 65%.
In terms of the funding agreements negotiated in September 2020, the group's debt funders
require interest bearing debt to be reduced by R1 billion by 30 September 2021 through a
strategic asset disposal process or a combination of asset disposals and a capital raise. Based
on improved operating results to date and binding offers received, the milestone date for
obtaining further binding offers has been extended. This will allow our lenders time to re-
evaluate the full extent of the quantum of the asset disposals and potential capital raise
required, after considering the group's results for another quarter.
PRE-CLOSED PERIOD CONFERENCE CALL
Nampak management will hold a pre-closed period telephonic conference call on Wednesday,
31 March 2021 at 15:00 Central Africa Time (UTC+2) to discuss this trading update and
address questions from the investment community. Dial-in details are available on Nampak's
website.
The financial information contained in this statement is based on unaudited management
accounts and the company is satisfied with the quality of those management accounts. The
information has not been reviewed or reported on by the company's external auditors.
Nampak will release its interim results for the six months ending 31 March 2021 on the Stock
Exchange News Service on or about 28 May 2021. Nampak will be in closed period from 1
April 2020 until the release of its interim results.
Bryanston
31 March 2021
Sponsor: UBS South Africa (Pty) Ltd
Forward-looking statements: Certain statements in this document are not reported financial
results or historical information, but forward-looking statements. These statements are
predictions of or indicate future events, trends, future prospects, objectives, earnings, savings
or plans. Examples of such forward-looking statements include, but are not limited to,
statements regarding volume growth, increases in market share, exchange rate fluctuations,
shareholder return and cost reductions. Forward-looking statements are sometimes, but not
always, identified by their use of a date in the future or such words as 'believe', 'continue',
'anticipate', 'ongoing', 'expect', 'will', 'could', 'may', 'intend', 'plan', 'could', 'may', and
'endeavour'. By their nature, forward-looking statements are inherently predictive, speculative
and involve inherent risks and uncertainties, because they relate to events and depend on
circumstances that may or may not occur in the future. If one or more of these risks materialise,
or should underlying assumptions prove incorrect, our actual results may differ materially from
those anticipated. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to: changes in economic or political
conditions and changes to the associated legal, regulatory and tax environments; lower than
expected performance of existing or new products and the impact thereof on the group's future
revenue, cost structure and capital expenditure; the group's ability to expand its portfolio; skills
shortage; changes in foreign exchange rates and a lack of market liquidity which holds up the
repatriation of earnings; increased competition, slower than expected customer growth and
reduced customer retention; acquisitions and divestments of group businesses and assets
and the pursuit of new, unexpected strategic opportunities; the extent of any future write-
downs or impairment charges on the group's assets; the impact of legal or other proceedings
against the group; uncontrollable increases to legacy defined benefit liabilities and higher than
expected costs or capital expenditures. When relying on forward-looking statements to make
investment decisions, you should carefully consider both these factors and other uncertainties
and events. Forward-looking statements apply only as of the date on which they are made,
and we do not undertake any obligation to update or revise any of them, whether as a result
of new information, future events or otherwise.
Date: 31-03-2021 12:08:00
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