Packaging group Nampak reported on Wednesday it swung into an interim loss of more than five times its R455 million market value, hit by massive writedowns as well as currency devaluation losses in Angola and Nigeria
The company reported a loss of R2.45 billion for its half-year to end-March, from profit of R321 million previously, with operating profit – before writedowns – crashing 62% to R529 million.
Net finance costs climbed 77% to R494 million for the group, whose shares have crashed about three quarters over the past year. Despite the dire results, flagged via trading updates, the company’s shares lifted over 9% on Wednesday morning, although they are still down almost a third in the year to date. Click here for details of the company’s shares as well as other info.
Nampak has been battling under the weight of an unsustainable debt pile that climbed 23% to a net R5.9 billion to end March.
It has been struggling to convince shareholders to back a highly dilutive rights issue of a maximum of R1 billion, and while it has successfully renegotiated its debt terms with lenders, shareholders must approve the rights issue by the end of July. Should this not occur, Nampak will face a step up in interest rates.
The group’s operating profit meanwhile was hit by significant foreign exchange losses in Nigeria (R531 million) and Angola (R40 million). It also saw writedowns to goodwill to its BevCan Nigeria business of R1.5 billion, in part due to softening consumer demand amid a shortage of bank notes, while about half of the impairment was related to calculations of the measure of risk to capital in the country, which has been downgrade by ratings agencies.
The company also reported writedowns of R900 million for assets in Angola and in SA.
“2023 is a defining year for Nampak,” interim CEO Phil Roux said in the results.
“Our group is a formidable business that is faced with unsustainable debt levels. Our strategic imperative is to focus on a new business model, that aims to unlock value in the short to medium term with a glide path that is configured to be fit for growth.”
“A rigorous cost reduction program, business remodelling and signficant reduction in net working capital will be fundamental to our efforts in the short term,” he said.
“The divestiture program requires increased impetus as a critical enabler to reducing our debt encumberance to manageable levels. The medium term will deliver a honed portfolio of assets with a fit for purpose business model, and consequently, a reinvigorated Nampak as an outcome.”