packaging company Nampak is moving ahead with capital expenditure (capex) of about R1-billion for the installation of a third glass furnace for its Nampak Glass division, at its Roodekop plant, outside Johan- nesburg.
Nampak Glass signed long-term supply contracts with key customers to guarantee additional glass volumes, a prerequisite for installing the third furnace, which is expected to be commissioned by the end of this year.
Meanwhile, the company’s beverage cans division has also agreed to long-term supply contracts with its large beverage can customers. In this regard, Nampak will buy a new high-speed aluminium line and will convert existing lines from tinplate to aluminium at a capital cost of about R600-million.
The new can line is expected to be commissioned in May and the conversion of the first of the existing lines will be completed by October and the balance in 2014, the company says in a recent update to shareholders.
The two capex projects amount to just under R1.6-billion and will be funded from Nampak’s own resources, given its strong balance sheet.
The company indicates that the projects will strengthen the company’s position in the beverage can and glass sectors in South Africa.
Meanwhile, Nampak recorded mixed con-sumer demand for its packaged products during the first quarter of its 2013 financial year.
Hot weather in most parts of South Africa during the festive season resulted in good demand for beverage packaging, with beverage cans continuing to show further growth, compared with the corresponding period the year before.
However, demand for other fast-moving consumer goods was subdued and packaging volumes were affected accordingly.
Selling prices remained under pressure in an extremely competitive environment.
In the rest of Africa, Nampak’s Angolan beverage can plant continued to perform well, despite cooler weather affecting demand in the early part of the quarter.
Other operations in the rest of Africa and the plastic milk bottle business in the UK per- formed to expectations. Despite the challenging economic conditions in South Africa, where Nampak generated some 70% of its revenue, the company remained confident of a further improvement in performance in 2013.