Nampak, the only can producer with operations in Angola, supplies about 56% of the market in the southwest African nation, with imports accounting for the balance, Chief Executive Officer Andre de Ruyter, 47, said in an interview on Friday. The Johannesburg-based company will probably see that market share increase as customers seek to avoid the looming import duty and source cans locally, he said.
The company is well positioned for growth in Angola despite a weakening economy, a shortage of foreign exchange and flat domestic demand for beverage cans after a drop in oil prices, De Ruyter said. Nampak sees its volumes rising 10% in Africa’s second-biggest crude producer this year as the company replaces imports, he said. The executive will travel to Angola this week and plans to meet with the country’s main importer of beverage cans, Refriango.
“Hopefully we can make some progress on securing the volume for our business there,” De Ruyter said at Bloomberg’s office in Johannesburg. “We would then be in a position to supply very close to all the market requirements.”
Nampak entered Angola in 2011 and has the capacity to produce 1.8 billion cans a year after commissioning a second production line in May. Domestic beverage producers are expressing interest in buying from the company in anticipation of the new duties, which are being introduced by the government in an effort to boost local manufacturing, De Ruyter said.
The Angolan economy is struggling to cope with crude prices below $50 a barrel, with the commodity accounting for the bulk of government revenue last year and almost all export earnings. Angola’s kwanza has weakened to a record low after the central bank devalued the currency in two steps since June. The central bank in July lowered its economic growth forecast for this year to 4.4% from a previous estimate of 6.6%.
While foreign exchange restrictions are making it difficult to transfer funds from Angola, the curtailments are also helping Nampak’s sales pitch in the country, de Ruyter said. It’s becoming more attractive for beverage companies to source cans locally rather than import them with foreign currency that’s hard to come by, he said.
Nampak has to transport its own water to the Angola site, as well as the 20,000 liters (5,283 gallons) of diesel per day it uses to generate electricity. Even so, it’s the company’s most efficient production line, De Ruyter said.
Nampak will consider adding a third line in Angola, depending on how the economy develops, De Ruyter said. The company is also considering building a glass-bottle production facility in the country.
“It’s a very good market still for us, and we think that the longer term prospects are favorable,” De Ruyter said.
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