| Business Overview |
| Over the past twelve months, Nampak has taken positive strides on its ambitious transformation journey. The success of the turnaround strategy to date is evidenced by the strong financial recovery including effective revenue growth management, cost and inefficiency extraction, profitability and positive cash flow. This was augmented by the successful refinancing, numerous divestitures of non-core assets in line with the asset disposal plan and the implementation of a sustainable business model. |
| We continue to operate in a highly volatile environment impacted by global stability, and economic activity with concomitant currency effects, resulting in slower-than-normal customer growth. Economic growth is pedestrian, inflation high, currencies volatile, and consequently, consumer spending is slower than optimal. |
| The establishment of the GNU in South Africa is a positive development that should deliver economic prosperity that will arguably be realised over time. In the second half of the year, consumer spending remained muted. While food and beverage categories are largely defensive, they are not immune to inflationary pressures and high interest rates, which typically manifest in reduced consumption. This was evident in all geographies in which Nampak participated in 2024. |
| Volume growth for Nampak is highly dependent on customer growth and the ability to gain market share. The company is well positioned for category and share growth given available and newly installed capacity. |
| Continuing Operations |
| Group revenue from continuing operations of R10.0 billion increased by 1% consequent to an operating environment that was characterised by high interest rates, inflation and resultant pressure on consumers’ disposable income. Increases in Beverage South Africa and Beverage Angola respectively, were partially offset by a decline in Diversified South Africa due to category contraction, slower customer growth and partial volume loss. |
| The Beverage category continues to grow, in particular bbeveragesin cans, a format which is growing in terms of consumer preference. Challenges faced in the second half relating to the installation of the new 500ml production line at Springs meant that Nampak was unable to fully capitalise on this increased demand. However, significant resources were enlisted to ensure that this short-term setback was corrected expeditiously. Further,r capex to support growth will be invested including the relocation of a spare line from Angola to South Africa. |
| Diversified South Africa sustained the exceptional turnaround of the first six months generating a pleasing operating profit compared to a loss in the prior year despite volume declines due to slower customer demand, loss of business, the extended plant shutdown by a key customer and supply chain disruptions. The aforementioned challenges have, for the most part, been remedied. |
| Despite the Angolan economy remaining constrained with limited discretionary spending by consumers, this business performed exceptionally well. Increased oil output could be a renewed catalyst for economic growth and bring respite to tough trading conditions. Beverage Angola’s volumes were bolstered by normalised trading with a large customer. Costs were exceptionally well managed, augmented by excellent plant efficiencies. |
| The group reported EBITDA of R1.5 billion which increased by R1.1 billion from R343 million, benefiting from the implementation of the group’s turnaround plan. |
| Beverage South Africa delivered EBITDA of R806 million representing an increase of 38% from R583 million in 2023. This was complemented by the turnaround in Diversified South Africa which reported an EBITDA of R325 million compared to R15 million in the prior year. Beverage Angola performed well increasing its EBITDA contribution to R276 million from R43 million. |
| Cash generated from operations before changes in working capital of R1.6 billion increased by 114% from R741 million, reflecting the successful operational turnaround during the year. Rigorous management of working capital allowed a further release of R175 million in cash following an optimised 2023 net working capital position. |
| Group financial performance |
| R million |
FY24 |
FY23 |
% change |
| Continuing operations |
|
|
|
| Revenue |
9 956 |
9 881 |
1 |
| Trading profit |
1 048 |
438 |
>100 |
| Capital and other items |
196 |
(360) |
>100 |
| Operating profit before net impairment reversals/(losses) |
1 244 |
78 |
>100 |
| Net impairment reversals/(losses) |
471 |
(1 117) |
>100 |
| Operating profit/(loss) |
1 715 |
(1 039) |
>100 |
| Profit/(loss) for the year |
626 |
(2 215) |
>100 |
| Earnings/(loss) per share (cents) |
7 554.0 |
(64 415.9) |
>100 |
| Headline earnings/(loss) |
278 |
(1 341) |
>100 |
| Headline earnings/(loss) per share (cents) |
3 361.1 |
(39 004.6) |
>100 |
| Discontinued operations |
|
|
|
| Loss for the period from discontinued operations |
(1 007) |
(1 737) |
42 |
| Total operations |
|
|
|
| Loss for the year |
(381) |
(3 952) |
90 |
| Basic loss |
(373) |
(4 033) |
91 |
| Loss per share cents |
(4 500.8) |
(117 295.5) |
96 |
| Headline earnings/(loss) |
114 |
(1 610) |
>100 |
| Headline earnings/(loss) per share (cents) |
1 378.0 |
(46 811.7) |
>100 |
| Cash generated from operations |
|
|
|
| - Before working capital changes |
1 587 |
741 |
114 |
| - After working capital changes |
1 762 |
1 645 |
7 |
| Net debt |
4 436 |
4 639 |
4 |
| Current ratio |
1.9 |
1.8 |
|
The board has decided not to declare an ordinary dividend for 2024 (2023: Nil). |
| Financial Overview Continuing Operations |
| Group revenue growth of 1% was supported by increases of 4% and 6% in Beverage South Africa and Beverage Angola respectively, partially offset by a 7% decline in revenue in Diversified South Africa. The stronger Rand adversely impacted the translation of Angola’s revenue to Rand. |
| Trading profit increased by 140% to R1.0 billion assisted by improvements of 47% in Beverage South Africa, 60% in Beverage Angola and 937% in Diversified South Africa, partially offset by non-recurring restructuring costs. |
| Capital and other items of R196 million boosted profitability compared to a net negative contribution of R360 million in 2023. This resulted in a positive swing of R556 million. Contributors to this movement included a R290 million post-retirement medical aid gain; a reduction of R137 million in forex losses in Angola; and R27 million lower retrenchment and restructuring costs. |
| Operating profit before net impairment reversals/(losses) of R1.2 billion increased from R78 million assisted by improvements of R224 million in Beverage South Africa, R251 million in Beverage Angola and a conversion of a R6 million operating loss in Diversified South Africa to an operating profit of R301 million. |
| Nampak recorded reversals of asset impairment losses of R471 million. These were due to net impairment reversals of R273 million and R234 million related to Diversified South Africa and Beverage Angola respectively, reflecting the improved outlook for these operations. This compares favourably to net impairment losses of R1.1 billion in the prior year. |
| An operating profit of R1.7 billion was reported compared to an operating loss of R1.0 billion in the prior year. |
| Net finance costs decreased by 24% to R926 million from R1.2 billion. This was despite persistently high interest rates compared to the prior year, coupled with on average higher investment in working capital due to the impacts of a cyber breach in March 2024. In addition, the funding of R222 million for the Springs Line 2 expansion utilised cash from internally generated sources that would otherwise have been used to settle interest-bearing debt. The group incurred R32 million in refinancing transaction costs compared to R335 million in 2023. |
| The group’s effective tax rate for the year was 20.1% compared to a tax shield of 2.2% in the prior year. The tax rate in 2024 was impacted by the asset impairment reversals. |
| The group recorded a profit of R626 million attributable to owners of Nampak compared to a loss of R2.2 billion in 2023. This was supported by improved trading results, the positive contribution from capital and other items, asset impairment reversals and lower net interest. This resulted in earnings per share from continuing operations of 7 554.0 cents compared to a loss of 64 415.9 cents per share (cps) in 2023. Headline earnings from continuing operations were R278 million and headline earnings were 3 361.1cps compared to a R1.3 billion headline loss and a headline loss of 39 004.6 cps in the prior period. |
| Cost-saving initiatives |
| The rigour with which procurement processes were managed contributed significantly to the reduction in raw materials and consumables used to R5.8 billion from R6.3 billion. Employee costs of R1.4 billion decreased 11% from R1.5 billion due to cost containment, retrenchment and restructuring initiatives. Other operating expenses declined by 23% to R1.3 billion from R1.7 billion. The group continued to focus on cost savings through site rationalisation, cost synergies between Beverage South Africa and Diversified South Africa and rationalised centralised costs. |
| Forex losses, cash transfers and exchange rates |
| Nampak’s active management of procurement and related forex resulted in a reduction in forex losses in Angola to R41 million from R179 million. Cash transfers of R587 million (2023: R717 million) from Angola were made during the year to settle foreign creditors. To partially hedge against further currency depreciation, we acquired US$3 million worth of US dollar bonds. These instruments have seven-year maturity tenors, attract a 7% interest rate per annum, have been classified as long-term assets and have proved to be highly effective hedging mechanisms. |
| Discontinued Operations |
| Discontinued operations include Beverage Nigeria; Liquid Cartons South Africa, Malawi and Zambia; South Africa Plastics and Tubes businesses; Inspection and Coding Systems (I&CS); Nampak’s Ethiopia business; Kenya Metals and Nampak Zimbabwe. I&CS offers cost-effective, quality product coding and control systems for the packaging industry. The unit was previously reported under the Beverage division. |
| Net impairment losses declined to R683 million from R1.7 billion. This was mainly due to the reduction in the goodwill impairment related to Beverage Nigeria. |
| The loss for the year from discontinued operations was R1.0 billion, representing a decline of 42% from R1.7 billion in 2023. |
| The table below sets out the (loss)/profit per discontinued operation/asset disposal group for the year: |
| Description |
2024
Rm |
2023
Rm |
| Beverages Nigeria |
*(658) |
**(1 864) |
| Nampak Zimbabwe |
(15) |
170 |
| Liquid Cartons Group |
***(318) |
107 |
| The rest of SA Plastics |
(84) |
(184) |
| Other businesses |
68 |
34 |
| Total |
(1 007) |
(1 737) |
* Includes forex losses of R264 million and goodwill and asset impairments of R661 million |
| ** Includes forex losses of R941 million and asset impairments of R1.5 billion |
| *** Includes translation reserve loss of R203 million recycled to other comprehensive income |
| Total Operations |
| A loss of R373 million attributable to owners of Nampak for 2024 was reported compared to a loss of R4.0 billion in 2023. This resulted in a loss per share of 4 500.8 cents compared to a loss of 117 |
| 295.5 cents per share (cps) in the prior year. The headline earnings were R114 million and headline earnings per share of 1 378.0 cps compared to an R1.6 billion headline loss and a headline loss of 46 |
| 811.7cps in 2023. |
| Nampak’s net asset value per share of 14 216 cents was 28% lower than 19 810 cents in September 2023. This was primarily due to the loss incurred for the year. |
| The step change in profitability is reflected in the 114% increase in cash generated from operations before working capital changes of R1.6 billion from R741 million in 2023. This was augmented by a release of R175 million in cash from net working capital due to strong working capital management. Cash generated from operations increased to R1.8 billion from R1.6 billion with the prior year's cash generation supported by an R905 million release from net working capital. |
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| Nampak Limited |
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