The Sunday Mail
Enacy Mapakame – Business Reporter
LISTED plastic and metal packaging manufacturer Nampack is being weighed down by declining sales volumes at giant beverages maker Delta Corporation.
Delta is the largest consumer of metal canning products and metal bottle caps from Carnaud Metalbox (CMB), a unit of Nampack.
For the nine months to December 31, 2014, Delta reported that lager beer volumes dropped 20 percent from the same period a year earlier, while sparkling and alternative beverages slumped 6 percent.
On the sidelines of the firm’s AGM in Harare last Wednesday, Nampak group managing director Mr John Van Gend said: “Obviously when there are demand issues at any of the clients, we as suppliers are affected.”
It is understood that margins are under pressure due to demand for lower prices triggered by an influx of cheaper imports.
The continued appreciation of the United States dollar against South Africa’s rand is making imported goods attractive for local consumers.
South Africa is Zimbabwe’s largest trading partner.
Recent figures from the Zimbabwe Statistical Agency show the country’s import bill declined from US$8 billion in 2013 to US$6,4 billion in 2014.
“One of the areas of most concern to our group at present is the proliferation of imported products, particularly coming out of South Africa, at what can only be described as penetration prices. This is having a material effect on both volumes and margins in certain product areas of our business.
“We are also seeing our major customers suffering from reduced demand, which naturally has a knock-on effect for us. But these problems are not unique to us only,” added Mr Gend.
According to the Confederation of Zimbabwe Industries 2014 Manufacturing Sector Survey, fierce competition from Brazil, Russia, India, China and South Africa is threatening to put domestic producers out of business.
Direct foreign competition rose to over 90 percent in 2014 from 58 percent in 2013, with the largest supply of imports coming from the BRICS.
A CZI tour of the country’s five leading packaging companies late last year revealed the dire state of the sector.
The closure of Reckitt Benckiser, a multinational consumer goods company, and continued viability problems at Cairns, heavily dented the business of local packing manufacturers.
CMB is presently operating at 10 percent better than last year. Demand for cans is still low.
However, Nampack’s other units – Megapack, a manufacturer of plastic packaging products; and Hunyani, a paper product maker — performed relatively well.
But volumes at Megapak are lagging behind last year’s figures.
Nampack has a 49 percent stake in Megapak, while Delta Corporation holds the remainder.
The Johannesburg Stock Exchange-listed firm also has a 38,6 percent shareholding in Hunyani, though Nampak wholly owns CMB.
The group has invested over US$5 million in different projects: US$2,5 million will go towards new tobacco boxing equipment at Hunyani Corrugated, while the remainder will capacitate Megapak.
“A further US$3 million worth of capital injections are currently being looked at and we expect final approval of these projects by end of March,” said Mr Gend.
