Packaging manufacturer, Nampak Zimbabwe says its capital expenditure programmes remained curtailed due to the lack of foreign currency required to fund projects. The economy continued to suffer from the scarcity of foreign currency.
“The shortage of sufficient foreign currency for importing raw materials remained the Group’s main concern, especially in respect of paper for conversion into corrugated boxes for the commercial and tobacco sectors,” Managing Director John Van Gend said.
However, the introduction of the foreign exchange auction system has improved availability of United States Dollars at an official exchange rate. The interbank exchange rate is currently trading at ZWL$80 to USD1, from an initial starting point of ZWL$57 to USD1. “Inflation, temporarily at a reduced rate of increase, will continue rising against the value depreciation of the Zimbabwe Dollar.”
The company’s revenue for the third quarter ended 30 June 2020 was five times ahead of prior year quarter in historical terms due to inflation assisted prices. In the same vein, cumulative revenue for the nine months to June was six times ahead of the prior year period in historical terms.
Van Gend said volume reduction continued across all sectors of the business. Margins were squeezed due to competition in the market. “However, demand remained positive across most product portfolios and all units traded profitably,” he added.
Treasury and cash flow management have been under strict control, he said, with participation on the foreign exchange auction expected to strain liquidity. Nampak remains operational as it was approved as an essential industry for manufacturing packaging in support of the tobacco, food and beverage, pharmaceutical and detergent and sanitising industries.