JSE-listed packaging company Nampak increased its revenue for the financial year ended September 30, by 8% year-on-year, while trading profit increased by 26% and trading margin improved to 12.3% from 10.5% in the 2024 financial year.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) for the metals segment were R1.6-billion, while the Ebitda of the corporate segment was R284-million. Ebitda based on operating profit increased by 26% to R1.9-billion, the company says.

Adjusting for capital and other items in the current and prior year, Ebitda increased by 23%, or by R301-million.

The improvement is attributable to an enhanced trading performance, the benefits of restructuring activities, excellent cost management and higher positive capital and other items.

Further, net finance costs decreased by 45% to R508-million.

Headline earnings increased by 213% to R872-million, up from R278-million in the prior financial year, resulting in headline earnings a share of R105.10, up from R33.61 a share in the prior financial year.

Headline earnings a share, excluding one-off capital and other items, of R77.39, were 46% higher year-on-year.

Additionally, net debt, excluding lease liabilities, decreased by 52% to R2.1-billion compared with R4.4-billion in the prior financial year. This was primarily owing to the proceeds from disposals of R1.5-billion and R237-million from a Covid-19 insurance claim used to repay net debt, the company says.

Further, net gearing excluding lease liabilities reduced to 77% from 312%. The net debt-to-Ebitda ratio for covenant purposes closed at two times, Nampak says.

DIVISIONS
During the first half of the 2025 financial year, Nampak's Beverage South Africa business was not able to fully meet demand from customers in a key trading period that included Christmas, summer and Easter trading.

This was the result of intermittent production challenges on the recently commissioned Springs Line 2, which have subsequently been addressed with significantly improved efficiencies and output. Positive operating leverage was achieved notwithstanding the aforementioned.

Despite this, Beverage South Africa delivered Ebitda of R907-million, representing an increase of 13% from R806-million in the prior financial year.

Further scope exists for an improvement in operating efficiencies to fully benefit from the increased large can capacity created in Beverage South Africa. Capacity will be further bolstered by the relocation and installation of the spare Angolan line in South Africa, Nampak notes.

Diversified metal can business Diversified South Africa experienced challenges owing to customer procurement constraints within the canned fish sector. The business was further impacted on by a customer changing its infant formula packaging to an alternate substrate and format.

“Pedestrian volume growth was experienced in the fruit, vegetables and aerosol segments owing to constrained consumer spending. Ebitda of R310-million declined by 5% from R325-million in the prior financial year,” the company says.

Meanwhile, the Beverage Angola business performed well in a more favourable operating environment supported by a relatively stable currency. The customer base in Angola is expanding, providing an opportunity to use spare capacity.

Further, new fillers have been commissioned by customers in Angola and neighbouring Democratic Republic of Congo which represents a new growth vector. Beverage Angola’s performance was pleasing, with Ebitda increasing by 30% to R360-million from R276-million in the prior financial year.

For continuing operations, revenue increased by 8% to R10.7-billion, with increases of 6% in Beverage South Africa and 2% in Diversified South Africa, assisted by a 12% increase in Beverage Angola.

Trading profit increased by 26% to R1.3-billion, assisted by improvements of 14% in Beverage South Africa and 12% in Beverage Angola, which were partially offset by a decline of 12% in Diversified South Africa.

Trading margins expanded to 12.3% from 10.5% by virtue of rigorous management of operating costs and the impact of restructuring activities in South Africa in the latter part of 2024 that yielded benefits in 2025 together with improved volumes in Angola.

Further, operating profit before impairment loss reversals increased by 28% to R1.6-billion from R1.2-billion in the prior year.

The improvements of 14% in the Beverage South Africa operations and 28% in profitability in the Angola operations, lower central costs and an improved benefit from capital and other items, were partially offset by a 9% decline in Diversified South Africa.

Net impairment loss reversals of R351-million, which were primarily related to Beverage Angola based on the improved outlook of this operation’s profitability, decreased by 25% from R471-million reversals in the prior year.

The reduction in net debt, lower interest rates, improved covenant ratios and higher cash generated from operations resulted in a 45% reduction in net finance costs, the company adds.

The effective tax rate for the financial year was 19.3%, compared with 20.1% in the prior financial year. Tax rates in both years were reduced by asset impairment reversals, the company notes.

Further, Nampak reported a profit for the year of R1.2-billion, compared with a profit of R626-million in the prior year, supported by improved trading results, the positive contribution from capital and other items, and lower net finance costs partially offset by lower asset impairment reversals.

This resulted in earnings a share of R139.71, compared with R75.54 in the prior financial year.

During the year under review, Nampak completed the disposal of the Bevcan Nigeria and the I&CS businesses, and the Tubes and Kenyan assets. These disposals yielded proceeds of R1.5-billion.

The successful execution of the asset disposal plan has been critical to the debt reduction, supported by a clear focus on an improvement in operating efficiencies, further reductions in overheads and lower foreign exchange losses, resulting in improved operating margin.

This has been augmented by focused working capital management, cash generation and conservative capital expenditure (capex), it adds.

Owing to this, net interest-bearing debt, excluding lease liabilities, decreased by 52% to R2.1-billion from R4.4-billion. Inclusive of lease liabilities, net debt of R2.9-billion decreased by R2.4-billion, or by 45%, from R5.3-billion, which helped to reduce the lease liabilities as part of the disposal transactions.

OUTLOOK
Beverage South Africa continues to demonstrate resilience while competing within a growth sector supported by increased consumer demand. Local demand for the can format remains buoyant and continues to be driven by convenience, innovation and sustainability.

Leveraging off recent capex and the planned 2026 relocation of the spare Angolan line, the operation is well placed to take advantage of sector growth and market share opportunities, Nampak adds.

Further, the prospects for Diversified South Africa are mostly reliant on customer organic growth, but there remains an opportunity to increase market share within a few sectors.

Large food contracts have been secured; however, format changes away from the can substrate and customer imports will have an impact on future revenue growth. Various initiatives across the value chain to enhance competitiveness and portfolio options are under review, the company notes.

“The beverage can business in Angola is poised for growth with clear opportunities for market expansion through increased substrate and market share growth, augmented by exports. Positive developments on the macro-economic front bode well for future growth given available capacity to meet growing demand.”

Additionally, the strategic focus is on investing for growth in Nampak's chosen markets, continuous operational optimisation and free cash flow generation.

Significant strides have been made to stabilise and advance the company towards sustained earnings growth. While conscious of the external vagaries as well as low-cost competition, Nampak will endeavour to remain lean and agile and be positioned to adapt to dynamic market conditions, it states.

The board did not declare an ordinary dividend for the 2025 financial year, similar to the prior financial year.