Nampak takes massive hit from Nigerian forex losses, impairments

Nampak swung to an operating loss of R2.57 billion for the 2023 financial year, as increased impairment and forex losses weighed on the company’s financials.

Nampak released its results for the year ended 30 September 2023 today, which revealed a weak financial performance.

The company’s revenue declined by 2%, with volume reductions primarily in Bevcan Nigeria, DivFood and Bevcan South Africa. 

The company said its operating net profit before impairment losses of R276 million reflects a decline of 76% compared to R1.2 billion in the prior year, with forex losses being the major contributor to this decline in the results.

Forex losses of R1.2 billion were incurred in the year, with R1 billion attributable to Nigeria.

“These losses were caused by a consistently weakening Nigerian naira in a forex market that was increasingly dysfunctional as foreign exchange became more scarce and dealings in the secondary currency market were commonplace at punitive rates,” Nampak said. 

“In June 2023, the Naira was floated, and although healthy for the economy in the longer term, this resulted in a further significant weakening of the currency in both the official and secondary market.” 

“Due to the significant lack of liquidity in the Nigerian currency market, there are no formal hedging opportunities, and our treasury function is reliant upon the allocation of US dollar liquidity by the Central Bank of Nigeria.”

Nampak made an operating loss of R2.6 billion – down R3.2 billion from the prior year’s operating profit of R640 million.

This is largely due to a significant increase in net impairments to R2.8 billion from R512 million in 2022.

The company also saw net finance costs of R1.2 billion in 2023 – a 109% increase from 2022. This includes expensed capitalised transaction costs of R335 million due to the substantial

modification of the company’s debt and R109 million relating to its capitalised leased assets.

These increased costs and impairments saw Nampak make a loss per share of 117,295.5 cents compared to a loss of 4,879.5 cents per share in 2022.

Nampak made a headline loss per share of 46,811.7 cents compared to headline earnings per share of 7,589.2 cents in 2022. 

Nampak’s net asset value per share of 19,810 cents decreased from 183,723 cents in September 2022, largely due to forex losses, impairments, high interest costs and the dilution impact of its rights issue.

Nampak did not declare a dividend for the year.