Angola's new letter of credit (L/C) requirements are a contributory factor in Africa's largest diversified packaging manufacturer suffering a full year loss.

Nampak reported a full year 1.5 billion rand (R1.5 billion - US$102 million) loss amounting to more than a third of its market capitalisation.

Currency woes

The South African company's loss of R1.5 billion for the year compares with a restated profit of R569.1 million in the previous twelve months.

The largest problem was a net devaluation loss of R1 billion due to a weakening of the Zimbabwean dollar.

Currency volatility in Nigeria and Angola also cut into Nampak's profits, it said in its annual report, with devaluation of the Angolan kwanza costing it R212 million.

L/C impact

Net finance costs also climbed 10 per cent to R246 million with finance income reduced due to the requirement that all Angolan imports must be supported by cash-backed L/Cs.

The group reported constrained consumer demand also had a negative impact across most of its operations.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.