Nampak Limited (JSE: NPK) has had a challenging year, declining over 37% year-to-date, which invited keen attention to its recent full-year earnings report. Amidst a macroeconomic landscape marked by persistent hurdles like low growth and stringent currency constraints in key markets, the company disclosed a 2% dip in revenue, totalling R16.6 billion. The decline, primarily attributed to volume reductions in Bevcan Nigeria, DivFood, and Bevcan SA, becomes a focal point in assessing the company’s trajectory.
Delving into the financials, Nampak reported a noteworthy R4 billion loss attributable to its owners, a substantial surge from the R147 million loss in the preceding fiscal year. The bottom line bears the weight of a considerable R1.1 billion foreign exchange loss stemming from its Nigerian business, further impacting profitability.
Regarding headline figures, the reported loss for the period reaches R1.6 billion, a significant contrast to the R229 million of the previous year. This translates into a headline loss per share of 46,811.7 cents, highlighting the company’s current financial struggles and prompting a closer examination of its strategies for potential recovery.
Technical
On the 1D chart, the momentum has turned bearish, with a descending channel forming, while the 100-SMA (orange line) trades above the 50-SMA (blue line) and 25-SMA (green line). The channel resistance at R170.72 underwent a brief test on Wednesday before the share price retreated, potentially signalling the lack of conviction from the market to enforce a breakout.
If the price remains within the channel, the current downtrend could persist. With the 25-SMA backing the dynamic channel resistance, it could prove difficult to move higher, making the neckline support at R152.62 an important one in the upcoming sessions.
However, if the price reverses and exceeds the R170.72 resistance, the price could attempt to move above the 50-SMA at R184.82, shifting the momentum in the longer term. Resistance at R192.48 and R206.60 could become pivotal in the future should the breakout be sustained.
Summary
After seeing its losses widen in its latest full-year earnings report, Nampak’s share price has struggled to exceed the dynamic resistance of the current descending channel. Should this resistance continue to prevent a channel breakout, the support at R152.62 could be a critical level to watch in the upcoming sessions.
Sources: Koyfin, Tradingview, Moneyweb, Nampak Limited
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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