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Article by Nampak 29 May 2013

Nampak continues to benefit from African operations

Nampak today released its interim results for the six months ended 31 March 2013.

Revenue from the rest of Africa increased by 19% to R1.2 billion whilst trading profit increased by 39% to R197 million following strong demand for beverage cans in Angola and good contributions from most other operations in Africa. The trading margin in the rest of Africa improved to 15.9% from 13.7% in 2012. Including exports, the trading profit generated from the rest of Africa now accounts for 28% of group profits.

Group revenue increased by 7% to R9.4 billion and trading profit increased by 6% to just under R1 billion with the trading margin holding steady at 10.1%.

Group operating profit increased by 13% and was enhanced by a gain on the revaluation of the acquisition of the Elopak joint venture and a gain on the reconsolidation of the Zimbabwean entities.

Earnings per share increased by 19% and headline earnings per share increased by 3%.The dividend was increased by 4% to 42.0 cents per share.

CEO Andrew Marshall said, “Trading profits in the rest of Africa continue to grow on the back of the investments we made and these together with other exciting opportunities that we are currently pursuing will contribute to our growing presence on the African continent. We have recently successfully raised US$175 million in the United States Private Placement market at extremely competitive rates and the proceeds will be used to fund our African expansion strategy.

In South Africa there was a marked downturn in consumer spending in the second quarter resulting in reduced demand for most types of packaging. All our business segments were negatively affected and lower average selling prices agreed as part of long-term supply contracts reduced the trading margin in our beverage can and glass businesses.

There was continued good growth in beverage cans and we recently commissioned the first new aluminium beverage can production line at our Springs operation. The project to convert beverage cans from tinplate to aluminium in South Africa is progressing according to plan.

Sales of fish cans were higher but fruit and vegetable can sales were lower. Weak consumer spending reduced the demand for aerosol, paint and polish cans. Due to the weaker demand, the planned commissioning of the third furnace for glass bottles has been delayed until the middle of next year.

The paper businesses were most affected by the downturn in consumer spending as folding cartons and flexible packaging are used for many consumer goods. This also impacted on sales of the associated corrugated boxes.

Revenue and trading profit of the plastics businesses were slightly ahead of last year.

The plastic milk bottle business in the United Kingdom performed at a similar level to last year in Pound terms but improved by 16% in Rand terms.

The group return on equity increased to 24% from 20% at the end of September 2012.”

On the overall outlook for the Group, Andrew Marshall stated, “our operations in the rest of Africa are expected to continue generating good results and the United Kingdom business is expected to improve on last year. However the downturn in consumer spending in South Africa is expected to continue. Overall though, we believe the Group is strategically well positioned for ongoing growth, especially in Africa”

The Board has agreed to the request of the CEO of Andrew Marshall, to retire in March 2014. The Chairman of Nampak, Tito Mboweni said “The board thanks Andrew for his valuable contribution. During his tenure, Nampak’s profitability has improved significantly, under-performing businesses were closed or sold and the expansion into the rest of Africa has accelerated. We will be considering both internal and external candidates and will announce his successor in due course.”
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