ZSE-Listed packaging firm, Nampak Zimbabwe Limited (Nampak) expects a downturn in sales volumes in the second quarter due to a hard lockdown imposed beginning of the year after posting a strong performance in the first period ended December 2020.
During the current quarter, demand for packaging material will drop significantly owing to a number of factors including disruption to business due to the lockdown and the seasonal off-peak period for tobacco packaging.
“The performance gains made in the first quarter are unlikely to be sustained in the second quarter owing to the lockdown, the tobacco packaging off-season and lower seasonal demand,”
“The outlook for the rest of the year will depend on the success of the agricultural season, the possible impact of further COVID-19 lockdowns and the measures that the authorities take to tackle the macro-economic challenges,” the company said in its latest trading update.
Revenue in historical terms for the first quarter was 411 percent ahead of prior year, as a result of improved sales volumes, greater availability of raw materials and inflationary pricing.
“The Group had a cash holding of $462 million at the end of the first quarter. This arose partly from customer prepayments and will be applied to restocking and settlement of trade payables,” said Nampak.
Sales volumes at Hunyani Corrugated Division for the first quarter were up on the prior year by 8%. The volumes in the commercial sector grew by 106% on prior year led by improved demand while the tobacco sector was 25% below prior year.
At Mega Pak, the first quarter sales volumes grew by 76% compared to the prior year period.
“Increased demand in the preforms market was the major contributor, but all areas of the business were up when compared to the prior year period with large injection moulding also being significantly higher,” the company said.