Zimbabwe: Nampak Outlines Debt Clearance Plan

19 February 2021

PAPER and packaging firm, Nampak Zimbabwe Limited, says it will next month start paying in tranches a US$66,8 million it owes foreign creditors.

In the 2019 financial year, Nampak Zimbabwe Limited (NZL) entered into an agreement with the Reserve Bank of Zimbabwe and Nampak International Limited (NIL) encompassing the undertaking by the Central Bank to provide foreign currency to pay off the debt held by the local paper and packaging firm to NIL amounting to US$66,8 million.

In its 2020 annual report, Nampak chairman Kumbirai Katsande said a hedge was put in place in the previous year (2019) following an arrangement made with the RBZ whereby amounts due to the major shareholder's procurement company were placed with the Apex Bank for future payment in tranches, "which are due to commence from 31 March 2021".

During the year under review, NZL capital expenditure amounted to $97,4 million compared to $51,9 million in 2019, the bulk of which was deferred expenditure from the previous year owing to foreign currency restrictions.

"The introduction of the foreign exchange auction trading system from 23 June 2020 has assisted our subsidiaries in obtaining reasonably regular access to foreign exchange for raw material imports.

"However, the foreign exchange available remains less than the amounts needed for normal operations," said Katsande.

On performance of the group, he said revenue increased by one percent compared to the prior year as demand remained positive in most market segments.

"There was a turnaround in the operating profit to a positive position from the loss incurred in the prior year.

"While revenue and operating profit show gains due to hyper-inflation, these do not reflect the contraction in actual volumes, which the group experienced in almost all operating units," he said.

In 2020, the group achieved sales amounting to $5,09 billion (2019: $5,06 billion) and trading income before adjustments of $828,1 million (2019: $1,129 billion).

A profit before tax of $927,4 million was achieved compared to a 2019 loss before tax of $7,80 billion.

The profit before tax was achieved after taking into account other material expense of $475 million and a net monetary gain of $658,1 million.

On capital expenditure, managing director Mr John van Gend stated in the annual report that his organisation's capital expenditure programme was focused mainly on projects started in the previous year.

"With some foreign exchange now becoming available through the auction system, we are hopeful that prioritised capital projects can be pursued," he said.

The group's entities are Hunyani, Mega Pak, CarnaudMetalbox, and Softex Tissue Products.

During the year under review Hunyani volumes for the full year declined by 28 percent compared to the prior year.

Meanwhile, the group maintained its engagement with the Government over its estates in terms of the Bilateral Investment Protection and Promotion Agreement with South Africa.

"Our intention is to rehabilitate them for timber and agricultural purposes, in support of the current Government policy thrust in this direction. We remain hopeful for the restoration of title or long-term leases, which will provide the security required for new investment and job creation," said Mr Van Gend.

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