Packaging giant Nampak has come a long way in the past three years as shareholder activism, a sizeable rescue rights issue and the hand of turnaround champion Phil Roux, appointed CEO in August 2020, guided what was a heavily indebted group away from some rather sharp rocks.
With a R1bn rights issue at R175 a share alongside a 500-for-one share consolidation, the Nampak share price has delivered growth of 130% since Roux began the restructuring. At one point a couple of years ago, Nampak’s market value was below that of enduring small-cap packaging companies Transpaco and Bowler Metcalf — indeed priced for disaster.
After asset sales in Nigeria and South Africa, the company’s legacy debt has more than halved. Bloated corporate and operational costs have been slashed. The balance sheet has materially improved and earnings and growth have turned positive for the first time in years.
Nampak had its AGM in mid-February, after new CEO Riaan Heyl had been in the job for eight days. Roux, having done much of the heavy lifting in fixing the business, stepped back at the end of January to become a nonexecutive director. Heyl, previously CEO of consumer brands conglomerate PepsiCo South Africa, was appointed to continue polishing Nampak operations. Heyl, it is worth noting, worked alongside Roux at Pioneer Foods and has a strong pedigree in marketing and operations.
As the market awaits interim results for the six months to end-March, Nampak has seen a remarkable recovery, with headline earnings of R105.10 per share for financial 2025 (up 213%) and normalised headline earnings 46% higher at R77.40 per share. Revenue for the year rose 8% to R10.7bn, with operating profit up 13% to almost R1.95bn. Finance costs fell 45%, aided by the benefits of restructuring.
The AGM was mostly upbeat, though there was a small but discernible wrinkle.
The operational bulk looks in fine fettle. The biggest unit in Nampak is beverages, which generated 61% of trading profits, with the vibrant Angola division chipping in 26%. It is the food sector-focused diversified division, the smallest operational segment in Nampak, that is still struggling.
Beverages and Angola are performing well, with volume growth and solid prospects. A beverage line is being relocated from Angola, where there is excess capacity, and rebuilt in Gauteng, where customer demand for smaller canning products and 500ml cans cannot be met. By September there should be an uplift in domestic capacity. Angola is seeing growth, and a recent move into the Democratic Republic of Congo holds promise.
The market does not appreciate how good a business Angola is; [neither] its value nor its prospects
— André van der Veen
But what to do about the pesky diversified segment? A tough consumer environment in some food and general packaging products, the loss of a major customer and challenges with some product categories will weigh on Nampak’s 2026 cash generation and earnings. The division is being rationalised, but more clarity on this development is likely only by financial year-end.
On a happier note, management stated at the AGM and in a first-quarter 2026 update that this financial year should see an improving performance from South African beverages packaging, with this division firing on all cylinders into 2027. Good results are also on the cards for the Angola segment. These performances should compensate for at least some of the ongoing woes in the diversified segment.
Despite the company’s solid prospects, the share price is down almost 10% year to date. Much of this weakness has arisen in the past few weeks as sentiment towards the stock softened due to lacklustre retail trading updates (which drag on packaging sector sentiment) and ongoing underperformance of the diversified division.
The market might be missing the fact that there will be continuing benefits within Nampak — especially with core beverage packaging likely to remain a growing volume category. Heyl has indicated he intends to polish the assets, which will increase capacity and improve margins as well as operational performance.
Furthermore, Nampak chair André van der Veen commented that “the market does not appreciate how good a business Angola is; [neither] its value nor its prospects”. He said that while the sale of the Zimbabwean assets stalled in September 2025, they will ultimately be sold, helping to reduce debt.
In financial 2026, it may become more evident that the real promise at Nampak is its materially better balance sheet and undergeared position, with Van der Veen hinting that Nampak could return to paying dividends in 2026. The group last paid a dividend 10 years ago.
On a modest earnings multiple of less than five, net debt halved to R2bn and further cost savings and asset sales to come, Nampak’s share price may tread water until the interim results are released and there is a strategic update from Heyl. But prospects remain distinctly upbeat, and bottom-feeding on the stock at this weakness could, literally, pay dividends.
The writer holds shares in Nampak
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