Nampak (NPK) H1 2024 earnings summary

Executive summary

• Achieved a significant operational and financial turnaround, with profit for the period of R395m, reversing a prior loss of R878m, and strong progress on transformation, cost reduction, and portfolio optimization.

• Revenue from continuing operations rose 7% year-over-year to R6.2bn, with EBITDA up 201% to R1,148m and trading profit up 133% to R770m.

• Strong operational improvements in Bevcan SA and DivFood, with cost reductions and margin expansion.

• Asset disposal program on track, with R2.2bn in assets held for sale and proceeds used to reduce net debt.

• Free cash flow generation of R810m, compared to an outflow of R109m in the prior period.

Financial highlights

• Operating profit before net impairments surged to R1,005m from R235m, with an operating margin of 11.6% (16.3% including PRMA gain).

• Headline profit of R447m, compared to a headline loss of R327m in 1H23.

• Net debt reduced by R1.3bn to R4.6bn; free cash flow of R810m, a turnaround from an outflow.

• Net finance costs decreased 7% to R459m despite higher interest rates.

• Cash generated from operations up 53% to R905m.

Outlook and guidance

• Targeting a net debt/EBITDA ratio of 2x–2.5x post-disposals, with further cost rationalization and asset optimization planned.

• Continued emphasis on margin expansion, working capital management, and capex curtailment.

• Growth expected in SA Metals with scope for share gains and efficiency improvements.

• Confident in sustaining margin improvements barring major external shocks.

• No interim dividend declared for 1H24.