Nampak is to invest in equipment to boost its bottle and can producing business to meet growing market demand.
The South African firm’s total ZAR1.6bn ($180m) investment is for an additional furnace at its glass bottle business and the conversion of existing tinplate lines to aluminium while adding beverage can capacity.
The first project will see the company invest almost ZAR1bn (US$112m) in an additional furnace at its glass bottle business based at Roodekop, Germiston.
The business already has two furnaces and the firm said a third will improve manufacturing efficiencies and enable it to supply a broader range of bottles.
Sales of the additional production have already been contracted to key customers –which the company did not reveal - and commissioning is expected by the end of 2013.
The second project is an investment of almost ZAR600m (US$67m) to add aluminium beverage can capacity and convert existing lines from tinplate to aluminium.
Nampak said a high speed line is being installed at the Springs plant for commissioning in May 2013 and the first of the existing lines will be completed by October 2013 and the balance in 2014.
The company added that the investment will strengthen their position in beverage can and glass sectors in South Africa and show the commitment to growing the economy in South Africa.
Funding of both projects will be from their own resources given low level of gearing and strong balance sheet, said the firm at its annual general meeting last week.
Tito Mboweni, Nampak’s chairman, said: “These two projects strengthen our position in the beverage can and glass packaging sectors in South Africa and show our commitment to growing the South African economy.”
Mixed demand in Q1
The company also provided a trading update for Q1 of its financial year ended December 2012 and noted that there had been mixed demand for packaged products.
“Hot weather in most parts of South Africa during the festive season resulted in good demand for beverage packaging but demand for packaging for many other fast moving consumer goods was subdued and selling prices remained under pressure in a very competitive environment,” said Nampak.
Operations in the rest of Africa and the United Kingdom performed to expectations.
In the rest of Africa, the Angolan beverage can plant continued to perform well despite cooler weather affecting demand in the early part of the quarter.
Other operations in the rest of Africa and the plastic milk bottle business in the United Kingdom performed to expectations.