Nampak’s share price has halved in the past year, as investors have come to terms with the unusual dynamics that Nampak is wrestling with in Nigeria and Angola, where it has substantial operations.
On Wednesday, Nampak released an operational update for the five months to February, saying that restructuring its businesses and reorganising its processes, in the past two years, had left it in a stronger position to navigate challenging economic conditions in major markets.
However, it had to manage currency-related difficulties in Nigeria and Angola especially.
While the global oil price has plummeted, Nigeria and Angola have maintained fixed and inflated exchange rates, which has resulted in investors such as Nampak not being able to get their money out, and becoming increasingly reluctant to commit new funds.
As such, Nampak said it would delay certain projects and curtail capital expenditure.
"The trading update is commendable from the perspective of increased transparency, and also showing caution in dealing with two economies which are ignoring market economics," Logan said.
"Given the continuous build-up of funds trapped in Nigeria and Angola, absent a miraculous recovery in the oil price, I expect Nampak to suffer a forex loss of the order of R500m when the artificial exchange rates are eventually brought in line with far lower market-related rates," he said.
Nampak CEO André de Ruyter said last year the rest of Africa, excluding SA, made up 49% of the group’s trading profit, up from 37% for the 2014 financial year. Nigeria and Angola were two major markets for the company in which it serves blue-chip clients, including Diageo, SAB and Unilever.
Nampak had placed delays on certain African projects.
"In view of current economic conditions, Nampak will be circumspect regarding further capital investment in the rest of Africa. As communicated in December 2015, Nampak has taken a decision to delay the investment into a third beverage can line and glass furnace in Angola, and is carefully evaluating further capital projects in the region," the group said.
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