Nampak Zimbabwe, a supplier of packaging materials, reports that it has seen positive effects from enhanced United States dollar collections during the third quarter of June 2023, primarily due to limited local currency liquidity. The trading update for the same period indicates that the majority of the foreign currency received was utilized for working capital purposes to fulfill customer orders.
“The liquidity crunch in the market continued to affect trading, resulting in more domestic transactions occurring in foreign currency. The order book across the group’s operating units remains firm,” group managing director (MD) John Van Gend said in a trading update.
Gend said revenue for the nine months to June at $413,2 billion grew by 41% in inflation-adjusted terms compared to the prior year period. Revenue in historical terms for the same period rose by 671% to $117,2 billion.
“Marginal volume improvements and inflationary pricing were the major contributors to the revenue growth. The group has benefited from improved USD collections in the quarter on the back of constrained ZW$ liquidity, most of which was deployed into working capital to meet customer demand. The group remains profitable despite the inflationary pressures pushing up the cost base,” the MD said.
Authorities maintained a tight monetary policy in the first half of the year, instituting a number of liquidity management tools. These included liberalisation of the exchange rate, tighter monetary policy, and the introduction of gold coins and gold-backed digital tokens.
This has resulted in an acute shortage of the Zimbabwe dollar on the market.
The quarter under review was characterised by ongoing currency volatility resulting in inflationary pressures being felt across all the market segments.
Author: PackagingNews Africa
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