By Tapiwanashe W Mangwiro.
HARARE, Zimbabwe. (News of The South) – The Group cited that the scarcity of foreign currency together with the rising inflation continue to present challenges for them. Production was also impacted by power shortages and increasing operating expenses as they have now resorted to the use of on-site generators.
Zesa has been contacted to try to alleviate the problems but they have not met their side of the deal.
Volumes for subsidiaries fell across board with Carnaud Metalbox experienced a volume decline of 40% year on year as major customers reduced demand and Mega Pak volumes declined 27% due to falling beverage and cordials sector consumer demand and difficulties in purchasing raw materials.
Hunyani paper and packaging local volumes fell by 54% due to pricing challenges and a decline in the cartons segment and problems faced in getting raw materials. As a result volumes for the full year were down 8% but were however cushioned by a 65% surge in tobacco packaging exports to Malawi and ad-hoc orders from Mozambique. The commercial segment experienced a loss of volumes due to pricing challenges and a decline in the cartons segment due to raw material sourcing limitations.
The Group’s revenue was up 225% to $377 million on the back improved sales for the year. The group however ended up incurring a loss of $789 million in FY2019 from $9 million profit FY2018. Operating loss for the year came in at $932 million due to other material expenses of $1 billion.
The group noted that the issue of blocked fund affected its results, “the other material expenses comprised net foreign exchange losses of $686.4 million, arising largely from the Blocked Funds foreign trade payables and an impairment of the Reserve Bank of Zimbabwe Non- Current Receivable by $733.2 million.”
The decision to impair the financial hedge was in line with the approach adopted by the major shareholder, Nampak Limited, and was guided by the prevailing economic challenges and financial uncertainty.
Capital expenditure amounted to $68 million which was a significant reduction on prior year and reflects the constrained operating environment. Nampak said there are some significant capital projects currently being reviewed by management and should funds become available, it is our intention to implement them.
In their economic outlook they anticipate that the economic climate will likely continue to be in negative territory unless the authorities do more to change course in favour of fundamental market realities.
Headline earnings per share improved by 447.58% to 30.50 cents from 5.57 cents a year earlier.
Statement of Income Highlights HY 2019($000) HY2018($000) Variance
Total Revenue 377,368 116,796 225%
Operating Profit/(loss) -932,967 14,465 -6350%
(Loss)/Profit for the Period -789,075 9,200 -8477%
EPS 30.50 cents 5.57 cents 448%
Statement of Financial Position Highlights
Total Assets 622,928 172,118 262%
Total Liabilities 1,333,380 96,291 1285.00%
Cash and Cash Equivalence 57,437 84,527 -32%
The company looks like a bad investment by having a billion liabilities but 93% of the figure is of the legacy debt held by the RBZ. The company can withstand the turbulence currently being faced by increasing exports to cushion decreasing local demand. The company has decided to continue with its investments as it has allocated $60 million into capital requirements.
The company’s share is currently trading at 102.71c, with a year to date of +42.65% and a 52 week change of +242.37%. The stock has a 52-week high of 102.71c and a 52-week low of 29.30c. It has 755,648,101 shares in issue with a market capitalisation of $776 126 165.
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