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Nampak’s half-year volume sales in South Africa fell 2.1 percent on “subdued” consumer demand, leading a fall in underlying profits, the packaging company said yesterday.

May 23, 2008

By Tom Robbins

Cape Town – Nampak’s half-year volume sales in South Africa fell 2.1 percent on “subdued” consumer demand, leading a fall in underlying profits, the packaging company said yesterday.

Elsewhere in Africa it was hurt by “irregularities” and an inefficient supply chain.

Company-specific issues such as the cold, wet summer in Gauteng and the carbon dioxide shortage negatively affected soft drink can sales, while the poor pilchard catch reduced demand for these tins.

“Stripping out these problems, volumes would probably have been flat,” said Nampak chief executive John Bortolan.

But Nampak said it had lost market share in paper and plastics packaging. Overall local volume sales rose 4 percent in the previous comparable period.

Demand for food and other fast-moving consumer goods is less affected by high interest rates and inflation but increasingly there are signs that it is not just big-ticket items such as cars and furniture that are under pressure.

Bortolan said it was difficult to read the consumer economy as there were “mixed signals”. Tissue volume sales, a more discretionary product than food, had risen 11 percent.

Softer sales in the in the six months to March had become marked in the new year when they turned negative, pulling the half-year figure down.

An analyst who asked not to be named said while it was hard to say to what extent Nampak sales reflected the health of the fast-moving consumer goods in South Africa, it was safe to say they had underperformed the sector.

South African sales were exposed to the performance of Coca-Cola can sales and the cold summer had resulted in weak soft drink sales, the analyst said. Overall the result had been poor.

Meanwhile, Nampak said it had incurred a loss of R25 million at its Nigerian metal packaging associate after the Lagos-listed company in which it held a 57 percent stake, overstated stock valuations.

In Angola it had been forced to increase stock-holding levels due to poor supply lines.

Nampak said due to higher interest rates and declining trading income, the company would reduce debt and pay back less cash to shareholders. The dividend would be cut from 33c to 28c a share.

Trading income before abnormal items fell 17.1 percent to R762 million. The company expected it to be negative for the full year but to fall by less.

Net profit after a higher tax bill in the previous period rose 39.7 percent to R646 million. Revenue gained 4.4 percent to R8.88 billion.

Yesterday, Nampak shares lost 6.47 percent to R14.30 on the JSE. The general industrials sector added 0.32 percent.