Nampak plans to expand in Nigeria through acquisitions that may exceed its largest takeover deals to counter slowing growth in its main South African market, its CEO, Andre de Ruyter, told Bloomberg in an interview on 9 July.
Ethiopia is also a target for expansion in East Africa while Ghana is the most prominent untapped market in the west, he said.
Although South Africa provides 70% of sales, here Nampak is aiming to protect its dominant market share and reduce costs, he said.
“The growth opportunity to take us to the next level of size can only come from Africa,” he told Bloomberg.
Nampak, which supplies firms from Coca-Cola to SABMiller Plc, is boosting its sub-Saharan production to supply 900m consumers that spend at least 20% of their earnings on food and beverages, he said.
The Johannesburg-based company agreed to buy Alucan, a Nigerian packaging company, for ZAR3.3bn ($307m) in its biggest ever deal last year and is studying an option to buy a plastics manufacturer in Nigeria. Nampak overcomes the unreliable power in the country by generating all its own electricity.
Nampak already has operations from Angola and Botswana to Kenya and Zimbabwe but will avoid unstable regions such as Niger and the Central African Republic and is unlikely to enter North Africa or former French colonies, he said.
De Ruyter took over as Nampak’s CEO at the beginning of March. The company reported first-half sales growth of 12% in May, which reflected a 9% increase in South Africa and a 24% rise in the rest of the continent.
Similarly, in Nampak’s home market its profit margin slipped to 8.5%, from 9.1% a year earlier, while the overall margin was 11%.
In South Africa, Nampak is aiming for modest growth in its profit margins in fiscal 2015, said de Ruyter. The firm aims to prune less profitable product lines and “unlock cash” that can be used to fund growth, he said.