Nampak invests $1.3 million in Zimbabwe capacity 9 months after deal collapse

Nampak Ltd., Africa’s largest packaging group, has committed $1.3 million to expansion and replacement projects at its Zimbabwean subsidiary, reinforcing production capacity and operational efficiency as the company recalibrates its strategy following the collapse of its planned exit from the market. 

The investment was directed at key units including Megapak and CarnaudMetalbox (CMB), supporting improved output and higher production volumes during the six months ended March 31, 2026.

Strengthening operations amid cost pressures

Managing Director John Van Gend said the capital expenditure played a positive role in the group’s performance, noting that the company continues to prioritize projects that enhance efficiency and sustain capacity.

The investment comes at a time when the group is navigating rising raw material costs and intensifying competition, factors that weighed on margins despite revenue growth during the period. Revenue rose 10% to $41.7 million, supported largely by stronger demand from Zimbabwe’s tobacco sector. However, higher input costs and aggressive pricing strategies across segments compressed margins, leading to a decline in trading profit.

Parent company advances exit strategy

South Africa-based Nampak Limited is continuing efforts to dispose of its 51.43% controlling stake in its Zimbabwean unit, with discussions ongoing with potential buyers.

The unit remains classified as an asset held for sale, as the group seeks to reduce net debt and limit exposure to currency volatility and macroeconomic risks associated with the Zimbabwean market. A previously proposed $25 million sale to TSL Limited collapsed in 2025 after the buyer withdrew despite completing due diligence and securing regulatory approval, citing changed circumstances.

Nampak, in 2024, sold its Nigerian can-making unit, Bevcan, to Alucan Investment for N103.8 billion ($68.5 million). Bevcan, Nigeria’s second-largest manufacturer of beverage cans, which was acquired in 2014 for $180.6 million, was sold  10 years after as part of Nampak’s effort to raise R2.7 billion ($147.8 million) to pay debt in South Africa.

Mixed operational performance

Group volumes increased 25% compared to the prior period, largely driven by delayed tobacco packaging orders carried over into the current financial year. However, demand softened in the second quarter across some segments.

Performance across divisions remained uneven. The Hunyani Corrugated Products unit recorded a 54% surge in volumes, supported by strong tobacco-related demand, while commercial volumes lagged behind prior-year levels despite a late recovery.

In the Cartons, Labels and Sacks division, volumes declined 3% overall, even as demand for tobacco paper wrap improved.

Megapak posted a 5% increase in volumes, although growth slowed from first-quarter levels. PET and preform categories remained resilient, while HDPE volumes dropped 15% due to cyclical demand trends. At CarnaudMetalbox, volumes declined 2%, reflecting ongoing pressure in metal packaging, although this marked an improvement from earlier in the year.

Operational challenges and outlook

Operations at the Ruwa plant were impacted by persistent power outages, which led to increased equipment breakdowns and reduced efficiency due to frequent production stoppages.

The board did not declare an interim dividend, opting instead to preserve liquidity to fund ongoing capital expenditure and operational requirements.

Despite near-term pressures, the group remains cautiously optimistic, citing expectations of improved tobacco output and a more stable economic environment to support future growth.

Management said its focus will remain on cost optimization, operational efficiency, and targeted investments, while continuing to explore strategic opportunities to strengthen the business.