Nampak has 19 plastics facilities in South Africa, running 209 lines for a portfolio of customers across a number of industries. We make PET preforms and bottles and HDPE bottles; paper gable-top cartons; drums and intermediate bulk containers; closures; tubes and crates. Nampak Plastics Europe operates eight facilities producing HDPE bottles, mostly for the dairy market in the United Kingdom and the Republic of Ireland. In the Rest of Africa, we have bottle, preform, crate and closure businesses in Ethiopia, Nigeria, Zambia and Zimbabwe.

Rob Morris and Rob Morris
Rob Morris
Group executive: Rest of Africa
Mxolisi Khutama
Group executive: Plastics
2017   2016   % change   
Key natural capital inputs
Energy use (GJ) 654 492   720 003   (9.1)  
Outputs affecting natural capital
Emissions intensity (tCO2e/Rm revenue) 27.93   25.28   10.5   
Financial capital
Revenue (Rm) 4 624   5 577   (17.1)  
Trading profit (Rm) 166   392   (57.7)  
Trading margin (%) 3.6   7.1    
Human capital
Employees 1 998   2 036   (1.9)  
LTIFR 0.62   0.67   Improved   
Key development

Key developments

  • Improved safety performance
  • Lost CSD preform volumes to backward integration by customers
  • Delivered growth of HDPE and PET bottle volumes, and sales of crates, drums and cartons
  • Formalised plans to consolidate liquid packaging sites in Gauteng, cut costs
  • Dependence on forex liquidity impacted Rest of Africa plastics businesses
  • In Europe, we reported a loss, but recorded improvements in operational performance


Guided by the strategic objective to unlock further value from our base business, in 2017 we advanced our work to sustainably improve the performance of our plastics business, delivering a stronger safety result, improved product quality and enhancing our maintenance, sales and operations practices.

We also gained traction in our efforts to embed a learning culture in the business and further improved our working capital management.

The market remained challenging, impacted by weak consumer demand and heightened competition, putting pressure on volumes and profitability. However, plans to grow sales started to yield results, as did those aimed at improving operations through a number of interventions designed to deliver value in the years ahead.

We continued to benefit from Nampak R&D’s work to reduce the usage of raw materials for various plastic packaging formats by designing lightweight containers that do not compromise on performance.

Liquid packaging – HDPE and PET bottles, drums and cartons

Demand from new customers and the recovery of sales volumes by a large existing customer supported growth in Liquid Packaging’s turnover and profitability in the year. This was despite the loss of a significant amount of preform business to backward integration and self-manufacture by two large CSD bottlers in the second quarter.

We remained focused on optimising our basket of products to the dairy industry and allied customers, while growing our presence in the market for packaging of water, sauces and condiments. We also made some progress in improving our position in the market for packaging of industrial, household chemical and personal care items.

After a difficult 2016, demand for drums – many used for bulk alcohol exports into the Rest of Africa – increased. We gained market share in both the large and small drum categories and continued our work to improve the efficiencies of our drums facility. Product launches by customers in the sorghum beer and juice sector drove some recovery in demand for cartons in the year. The cartons business also achieved very good cost control, supporting profitability.

Closures, tubes and crates

Our closures and tubes businesses felt the weight of the economic slowdown, but good control of costs mitigated against the pressure on volumes. The tubes business extended a contract with a large customer and successfully launched a drive to re-enter the non-dental personal care market.

Demand for crates was good, and we signed new contracts with two large customers, supporting our approach to shift volumes to more sustainable revenue sources. Recapitalisation of the crate business remains a priority for 2018, when we will continue to support a key beverage customer and grow our presence in the agriculture and bakery segments.

Looking ahead

In addition to the impact of the loss of preform volumes in the year ahead, we expect our business to come under pressure due to margin and volume losses as a result of customer tender allocation and the consolidation of operations.

Despite this, we have a portfolio of strong and diverse customers, a wide product range and good positions in the markets in which we operate. We expect further progress in our efforts to optimise capacity utilisation and drive growth. Our biggest opportunity in the year ahead lies in our project to address our cost base as well as improve the efficiency and effectiveness of particular parts of the business. Our focus remains on driving all aspects of operations excellence.

The first step in our site consolidation intervention is the consolidation of the Isando and Industria liquid packaging facilities in Gauteng, for which capital expenditure of R35 million has been earmarked. The closure of the Industria site in the second quarter of the new financial year will lead to the loss of up to 50 jobs.

In line with the strategic imperative to manage costs stringently, we will address all our fixed costs: we will look to reduce overheads and increase capacity utilisation in part by rationalising lines that are not adequately loaded, including those at the consolidated Isando site. As we reduce our cost base and fill available capacity with appropriate opportunities in adjacent markets, we will target a gradual widening of our trading margin towards industry norms.

Recapitalisation of the crate business and a key customer in-plant for liquids will follow, in line with the strategic imperative to invest to compete and in so doing defend market share. Demand for rigid plastics in South Africa is forecast to grow at 3.3% a year until 2019 as plastics’ share of packaging expands. We see opportunity to replace ageing machinery with state-of-the-art equipment through a multi-year investment programme, subject to this meeting hurdle rates of return. In this way we will improve our competitiveness through improved productivity, operational efficiencies, energy consumption and better quality products.

We also have several growth opportunities to support substrate shifts for customers in the food and spirits markets, import replacement and new product launches. We will continue to embed systems and processes to improve the effectiveness of the business and ensure that our people have clear skills development opportunities


In Zimbabwe, the inconsistent availability of forex impacted on the performance of operations as well as on consumer demand, particularly for beverages like sorghum beer, which – unusually for the region – are packaged in rigid plastics. Subdued economic activity, a material issue for Nampak, suppressed sales of preforms, closures and crates. A shortage of water also affected demand from some customers. We explored alternative export markets as well as various measures to better manage costs.

Our Nigerian plastics business had a good year, thanks to robust demand for closures from our multinational customer base. This signifies delivery on our strategic imperative to partner with major multinational customers.

In Ethiopia, demand for our crates continued to be strong, but delays in securing foreign exchange to fund imports of raw materials remained a major constraint on production, and made forecasting difficult.

Looking ahead

The continued shortage of US dollar liquidity in Zimbabwe continues to be a concern. In Ethiopia, while the recent lifting of a state of emergency bodes well for the economy, the continued shortage of forex available is worrying, hampering the delivery of the required volume of products to our customers.

The fundamentals for growth in packaging demand in the Rest of Africa in the medium to long term remain strong, supported by a youthful and growing population, expanding disposable incomes and increased urbanisation.

In line with the strategic imperative to sensibly manage and grow our presence in current jurisdictions, we continue to consider further rigid plastics investments in Zambia and Zimbabwe and intend to expand our Nigerian closure business with additional moulds as soon as possible.


2017 was a year of consolidation for Nampak Plastics Europe, with new leadership driving improvements in operational performance. However, our financial performance remained poor in a weak UK dairy market characterised by plummeting milk prices and tight margins.

Project overruns and certain manufacturing difficulties at a property attached to a customer’s dairy and the installation of an in-plant facility on this customer’s site led to the assessment of this as an onerous contract, given the contracted pricing.

While negotiations continue to find a solution to the pricing mechanisms, assets related to the operation amounting to R56 million have been impaired and the unrecoverable portion of the contract has been provided for as an onerous contract with both items being disclosed as an abnormal item, we took an impairment of R112 million related to the in-plant.

We are the leading producer of rigid plastic packaging in the UK, with our products representing some 38% of the milk bottle market. This is down from 55% in 2012, following consolidation among major milk producers and the subsequent loss of volumes to backward integration and self-manufacture by some customers. In 2017 this continued to put pressure on our cost structure.

However, we remained focused on our operations excellence drive: minimising our raw material usage, achieving greater energy efficiencies, getting our product quality right the first time, and optimising our machine efficiencies. The health and safety of our people remained our top priority. At the same time, we worked to leverage our facilities and lightweighting capabilities to serve a wider market, benefiting from the experience of our new commercial team to grow our customer base and product offerings.

The market responded positively and we had encouraging engagements with potential customers outside the dairy market who are seeking a more competitive product in which to package their products. We expect this market diversification drive to bear fruit in the medium to long term. Within the dairy market, we broadened our focus to include medium-sized dairies rather than attending solely to the largest players.

Nampak has been the driving force behind a reduction of up to 25% in the average weight of milk bottles in the UK in the past seven years. This provides us with opportunities in the home care, laundry care and personal care markets.

Looking ahead

In the year ahead, working in close cooperation with our customers, we intend to create added value through our innovative engineering and manufacturing processes. Our experienced new commercial team will continue to drive our growth plans. As the market seeks a partner with strong light-weighting and innovation credentials, we will leverage Nampak R&D’s many capabilities (including unique finite element analysis) to grow our customer and product base. We expect the business, which remains a generator of cash and a rand hedge, to return to profitability in the next two years.