Zim dollar depreciation of more than 100% hits Nampak shares hard

The devaluation of the Zimbabwean dollar led to Nampak reporting an 84percent decline in operating profit to R254million and a profit before tax of R6m compared to a profit of R1.36bn reported last year.

Outgoing chief executive André de Ruyter said the hyper-inflationary environment in Zimbabwe, coupled with the rapid depreciation of the Zimbabwe dollar by more than 100 percent in just nine months, has created an environment where the remaining cash balances had to be written down to reflect the new reality of a much weaker currency.

“We put in place a hedging agreement with the Reserve Bank of Zimbabwe to protect some R800m of the cash balances, but took a prudent view on this hedge and have provided for an expected loss on this amount of 85 percent. If we recover more than this, shareholders will benefit in future years,” De Ruyter said.