For Nampak, still South Africa’s biggest packaging group despite being in the throes of restructuring, it has been the best of weeks and the worst of weeks if the gyrations of its share price were anything to go by.
Yesterday afternoon, the share price had increased sharply by 9.4% to R438.50 after it released supplementary information to a trading statement that it released to the market on Wednesday,. Shareholders had phoned the company and asked for additional information following the release of the trading statement.
In the wake of the share price decline a day earlier, Nampak’s directors assured the market yesterday that “the underlying performance of the continuing operations remains sound and the outlook remains consistent with previous guidance provided.”
On Wednesday, when the initial trading statement came out that had forecast a turnaround to profit for the 12 months to September 30, 2024, Nampak’s share price plunged 12.5% to close at R400.76 per share.
Social media commentary suggests that despite the profit turnaround, there was concern among investors about the slowdown in headline earnings growth in the second half, and a lack of detail in the trading statement.
In Wednesday’s trading statement, Nampak had forecast headline earnings per share (HEPS) of between 1 250 cents and 1 450 cents for total operations, compared to a headline loss per share (HLPS) of 46 811.7 cents in the previous year.
Various assets are classified as held for sale and discontinued operations as part of an asset disposal programme that began in August 2023, as part of a financial turnaround plan for the group. The final results are expected to be released on Monday.
Nampak’s directors said that in the first half of the past financial year, there had been a once-off gain of R290m relating to a restructure in post-retirement medical aid benefits.
However, there were also several events and some non-recurring costs in the second half that have adversely impacted headline earnings.
These included a delay in commissioning the Springs Line 2 and the seasonal volume effect in South Africa Beverage.
There was R37m in disputed additional water and electricity charges levied by utility suppliers, while R29m was allocated for cyber recovery and security costs.
There were retrenchment and restructuring costs of R25m, while additional foreign exchange losses in Angola came to R38m. Refinancing and associated fees came to R112m.
An additional R65m once-off tax charge was recognised in the second half.
Over the past 18 months, Nampak has had to resort to restructuring and debt reduction initiatives after softening market conditions, sharp write-downs of goodwill in BevCan Nigeria and for assets in Angola and South Africa, foreign exchange losses in Nigeria and Angola, a debt burden that had reached R5.9bn as of March 2023, and losses in Angola and Nigeria.
BUSINESS REPORT