JSE-listed beverage, food and nonperishable packaging manufacturer Nampak is now in a stronger position to leverage its manufacturing capacity and restructured portfolio to navigate challenging economic conditions in key markets.

However, the company has revised its capital expenditure (capex) guidance downwards from an initial R1.2-billion to R1.6-billion previously stated, to between R800-million and R1.1-billion for this year as management focused attention on the rationalisation of 2016 capex.

Nampak has been restructuring and reorganising its business over the past two years, with low-margin businesses sold off, the implementation of a capex programme, investments in energy efficiency, improved focus on operational excellence, cost reductions and improvements in procurement processes.

The group said in March that it expected continued volume growth in beverage cans, gains from improved performance at its glass division and improved efficiencies from business improvement initiatives at DivFood would all contribute positively to earnings in the current financial year.

In an operational update for the period October to February, Nampak noted improved full-year volume growth was expected from Bevcan South Africa, despite volumes softening in the second quarter.

Further, the previously embattled glass division remained resilient and was expected to deliver profits after having turned around.

“Following a challenging 2015 financial year, all technical and operational issues are fundamentally resolved. The operation has returned to profitability and the improved performance is expected to continue going forward,” Nampak explained.

The plastics cluster benefited from continued incremental improvement in cost savings, product diversification and operational improvements in South Africa and the UK.

“Margins in the UK were somewhat lower as a result of a programme to regain market share. The South African business showed improved performance due to higher demand for juice and water driven by higher temperatures during the summer season and contribution from new sales to the lubrication oil market,” the company said.

In the rest of Africa, overall Nampak sales volumes continue to perform well and the businesses were profitable, a positive trend that was expected to continue.