Paper and packaging group, Nampak Zimbabwe will ride on the improved availability of foreign currency in the local economy to resume capital projects which were last year suspended due to the negative economic environment prevailing at the time, 263Chat Business has learnt.
The Group suspended all credit extensions and capital injection by the major shareholder, Nampak South Africa last year citing hyperinflation and shortages of foreign currency on top of a R1.9 billion foreign exchange loss.
Since the introduction of the foreign currency auction system mid-year, foreign currency availability and exchange rate stability have greatly improved prompting the Group to pursue prioritized capital projects.
“Capital expenditure programs focused mainly on projects started in the previous year. With some foreign exchange now becoming available through the auction system, we are hopeful that prioritized capital projects can be pursued,” said Group Managing Director, John Van Gend, in a trading update.
Among some of its capital projects are the replacement of machinery at its factories.
The Group highlighted that despite some alleviation as mentioned above, the foreign exchange shortage remained the Group’s main concern, especially in respect of paper for conversion into corrugated boxes for the commercial and tobacco sectors during the full year trading period ended September 30. 2020.
Group revenue and trading income results were significantly up in all three operating units, boosted by inflationary price increases. This was despite lower sales volumes across all sectors of the business.
“The sales volumes for the full year declined by 28% compared to prior year. The decline in Hunyani Corrugated Products division was driven by the tobacco case market where the local tobacco crop output was significantly down on the prior year and the delayed start of this year’s tobacco marketing season due to Covid-19 concerns,” the Group said of its Hunyani Paper and Packaging unit.
On Mega Pak, full year sales volumes declined by 12% against prior year mainly due to constrained consumer demand in the preforms market, in the first half of the year. However, local volumes picked up in the last quarter of the year.
At Carnaud Metal Box, sales volumes for the full year declined by 34% compared to the prior year. The shortage of foreign exchange and reduced disposable incomes in the first half of the year impacted demand.