JOHANNESBURG – South Africa’s Nampak reported an 8% rise in half-year earnings on Tuesday, sending the packaging maker’s shares to 9-1/2-month highs although the firm said again that it would not pay out a dividend.
The company has suffered from an economic slowdown that has crimped demand for its products and said it aimed to conserve cash. But it has been restructuring operations in the past seven years to sell non-core assets and fix its underperforming units.
Nampak, which supplies plastic milk bottles to Britain and operates in several African countries, said headline earnings per share for the six months to March 31 rose to 113.1 cents from 105.2 cents a year earlier.
Group operating profit rose 30% to R1.1 billion ($83.71 million), while group revenue of R9.3 billion was down 1%.
“Nampak has achieved record beverage can sales in Angola, improved results from Bevcan SA and Liquid Packaging in South Africa, and turned around general metal packaging in Nigeria,” chief executive André de Ruyter said in a statement.
About $54 million would be repatriated from Nigeria before September 30, he said.
“The share price is certainly responding to the earnings being up but more importantly the metals side of the business and the fact that they will be able to get some money out of Nigeria,” said Avior Capital Markets analyst Mark Hodgson.
Nampak shares climbed 15% to R21.85, a level last seen in August.
Nampak did not declare a dividend, mirroring its move in June. In March 2016, Nampak had said it was reviewing its dividend policy to deal with economic conditions.
“In view of the current risks and challenges, Nampak has decided not to declare an interim ordinary dividend, rather focusing its efforts on conserving cash,” it said.
Nampak said revenue from domestic operations increased by 3%, while sales in the rest of Africa rose 5% to R2.9 billion. The UK business recorded a trading loss of R39 million due to slow economic growth there.
The company, which also produces glass, plastic bottles and paper sacks, expects capital expenditure for 2017 to be between R900 million and R1.1 billion.
“It is expected that consumers in key trading markets will remain under pressure for the rest of the year with a concomitant negative impact on sales volumes,” the company said.