Nampak, South Africa’s biggest packaging group which is facing financial difficulties, had planned to retrench at least 213 employees, but will only lay off 20 following trade union negotiations.
The National Union of Metalworkers of South Africa (NUMSA) said Friday it had concluded a retrenchment agreement with Nampak Packaging after the group served the union with a section 189 notice and its intention to retrench at least 213 employees.
”Following extensive engagements with the employer, NUMSA has managed to reduce the number of involuntary retrenchments from 213 to 20,” the union said in a statement.
At its last year-end, Nampak employed 4 314 employees across 33 manufacturing operations. The previous year it employed 4 252 staff.
Namusa said Nampak would also pay the retrenched employees a severance package which was also better than that stipulated by the Basic Conditions of Employment Act (BCEA), which states that the minimum requirement for the severance package is one week’s remuneration for every year of completed service with the employer.
“NUMSA negotiated that the severance package should be three weeks’ remuneration for each year of completed service. Furthermore, as part of the agreement, any amount owed to employees, including accrued annual leave, would be paid with the final wages. An amount of R2 000 will also be paid towards assisting each employee to be re-skilled,” the union said.
Nampak’s share price fell 1.02% to 97 cents on Friday afternoon, but the price has fallen steadily from R3.88 a year ago as its financial issues have become more apparent.
At its shareholder meeting this month, shareholders did not approve the executive remuneration policy - and they also asked many questions and raised concerns about the executives receiving bonuses at a time when the group was considering going to the market to raise up to R1.5 billion .
At the end of last year, the group’s market capitalisation was only R1.3bn, having almost halved from R2.3bn the previous year.
At the end of January, the group said that for the three months to December 30, revenue had grown by more than 20% compared with the same time a year before, but operating profit fell mainly because of foreign exchange losses, finance costs and a higher tax rate.
Management said at the time that an updated board-approved strategic turnaround plan had been in place since September 2022, and had started to yield positive results, yielding an estimated annual working capital benefit and liquidity improvement in excess of R500 million, while the rights offer proposal was reduced to R1.5bn from R2bn.
Revenue growth was derived from increases across most of the beverage can businesses, and a moderate recovery at DivFood. Foreign exchange losses arose from increased transfers of cash from Angola and Nigeria.
Higher debt levels coupled with increased interest rates and a weaker rand/US dollar exchange rate resulted in significantly higher net finance costs - the group operated within its debt covenant thresholds.
BUSINESS REPORT