Our strategy – performance and plans

 

UNLOCK FURTHER VALUE
FROM BASE BUSINESS

Actively manage our portfolio

   

HOW WE DID IN 2019

  • Signed agreement for sale of Glass business
  • Signed agreement to sell Nigeria Cartons business
  • Decided against sale of Plastics crates and drums business after securing large contract
  • Resolved to dispose of the Nampak Plastics Europe business

HOW WE RATE OUR PERFORMANCE

WHAT WE WILL DO NEXT – ACTIONS DIRECTLY LINKED TO 2020 KPIs AND EXECUTIVE REMUNERATION

  • Seek to obtain relevant competition authority approval for the disposal of Glass and Nigeria Cartons
  • Pursue the disposal of Nampak Plastics Europe

Prudently manage cash

   

HOW WE DID IN 2019

  • Actively managed revolving credit facility (RCF) and maintained our debt covenants
  • Focused on cash management
  • Trade finance platform delivered favourable results
  • Cash position augmented by cash conversion from dollar-linked kwanza bonds
  • Leveraged RCF to fund planned increases in working capital
  • Allocated capital efficiently through capital assurance committee
  • Secured US$67 million hedge with Reserve Bank of Zimbabwe
  • Continued effective hedging of the kwanza

HOW WE RATE OUR PERFORMANCE

WHAT WE WILL DO NEXT – ACTIONS DIRECTLY LINKED TO 2020 KPIs AND EXECUTIVE REMUNERATION

  • Actively manage working capital with inventory funded by trade payables
  • Improve cash generation
  • Reduce US dollar-denominated debt levels
  • Continue to focus on capital allocation

Invest to compete

   

HOW WE DID IN 2019

  • Completed modernisation of DivFood two-piece can line in Rosslyn and installed additional tinplate aerosol can capacity at Vanderbijlpark
  • Progressed towards launch of new liquid carton designs, with improved appearance and functionality
  • Invested in moulds required to produce closures for motor lubricant bottles
  • Invested in Livingston site in the UK to modernise asset base and reduce transport costs

HOW WE RATE OUR PERFORMANCE

WHAT WE WILL DO NEXT – ACTIONS DIRECTLY LINKED TO 2020 KPIs AND EXECUTIVE REMUNERATION

  • Measured investment only in projects that will provide growth in returns above the hurdle rates
  • Launch new liquid carton designs
  • Reduce weight of our beverage cans further
  • Implement new plastics design, particularly for crates

Manage cash fixed costs

   

HOW WE DID IN 2019

  • Ensured below-inflation cash fixed cost increases
  • Continued to tightly control our capital investment programme
  • Reduced Bevcan Angola employee numbers by 108; South Africa Plastics by 46; Tanzania by 75 and Kenya by 52
  • Focused on operations excellence to drive efficiencies
  • Secured head office employee cost reductions of R148 million

HOW WE RATE OUR PERFORMANCE

WHAT WE WILL DO NEXT – ACTIONS DIRECTLY LINKED TO 2020 KPIs AND EXECUTIVE REMUNERATION

  • Right-size DivFood, including at Vanderbijlpark and head office
  • Reduce Bevcan employee numbers at Springs
  • Restructure R&D, with reduction in employees
  • Control capital expenditure
  • Significantly address the cost base across the group

Improve business performance by buying, making and selling better

HOW WE DID IN 2019

  • Generated greater internal efficiencies – including improved line speeds and cost savings – at Bevcan South Africa
  • Reported deterioration in our safety performance with LTIFR of 0.34
  • Lost key DivFood customer, signed up another large food group as long-term customer
  • Continued the turnaround of Plastics South Africa and developed new markets for cartons and beverage cans

HOW WE RATE OUR PERFORMANCE

WHAT WE WILL DO NEXT – ACTIONS DIRECTLY LINKED TO 2020 KPIs AND EXECUTIVE REMUNERATION

  • Grow our liquid cartons business
  • Continue with turnaround of Plastics South Africa
  • Continue to focus on operations excellence and better safety performance
  • Leverage Nampak R&D capabilities to improve manufacturing performance and raw material suitability

Nampak's strategy is to create value for our stakeholders by delivering sustainable profitability. When formulating our strategy, we consider the availability of and our impact on the six capitals, aiming to maximise positive outcomes and minimise negative ones. In a dynamic operating environment, the board reviews our strategy at least once a year, at its strategic planning session in September. This follows a process which includes divisional strategy updates and refinement by the group executive. We test the robustness of our strategy against both the risks and opportunities in our markets, considering the material issues we have identified. We measure progress on our strategy through the delivery by management of key performance indicators (KPIs) linked to remuneration.

 

More on how we define value

ACCELERATE GROWTH IN THE REST OF AFRICA

Grow at a reasonable and sustainable return

 

HOW WE DID IN 2019

  • Reported lower volumes and profitability from Bevcan Angola
  • Grew Bevcan Nigeria's market share

HOW WE RATE OUR PERFORMANCE

WHAT WE WILL DO NEXT – ACTIONS DIRECTLY LINKED TO 2020 KPIs AND EXECUTIVE REMUNERATION

  • Open up export opportunities in the Rest of Africa, using our manufacturing hubs
  • Grow at hurdle rate
  • Launch marketing campaigns in Angola and Nigeria to drive can consumption
  • Expand addressable markets by developing new segments

Partner with major multinational customers

 

HOW WE DID IN 2019

  • Increased Bevcan Nigeria sales volumes
  • Reduced Bevcan Angola sales volumes
  • Launched market invigoration initiative in Angola
  • Carried out significant research into consumer market trends in Nigeria

HOW WE RATE OUR PERFORMANCE

WHAT WE WILL DO NEXT – ACTIONS DIRECTLY LINKED TO 2020 KPIs AND EXECUTIVE REMUNERATION

  • Continue to leverage strong relationships with multinationals
  • Closely monitor changes in the purchasing strategies of multinationals
  • Support multinational companies' sustainability initiatives

Sensibly manage and grow our presence in current jurisdictions

 

HOW WE DID IN 2019

  • Continued with project in Angola to convert tinplate beverage can line to aluminium at cost of US$20 million
  • Debottlenecked our Bevcan Nigeria line, leading to greater efficiencies
  • Advanced project to establish our first food can line in Nigeria

HOW WE RATE OUR PERFORMANCE

WHAT WE WILL DO NEXT – ACTIONS DIRECTLY LINKED TO 2020 KPIs AND EXECUTIVE REMUNERATION

  • Complete conversion of Angola tinplate beverage can line to aluminium by March 2020
  • Investigate opportunities to increase market penetration by Bevcan Nigeria
  • Complete project setting up our first food can line in Nigeria
  • Drive exports in select markets where margins are attractive

GOOD PROGRESS MADE

SOME PROGRESS, MORE TO COME

DISAPPOINTING PERFORMANCE