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Hunyani profits up 39 percent

Packaging giant, Hunyani Holdings, saw its earnings attributable to shareholders increase by 39 percent from $84.3 million for the year ending October 1997 to $117.1 million last year but it says the ongoing fiscal indiscipline by the authorities will cause interest and inflation rates to remain high for most of this year.

Low economic growth rates are likely and this may translate to lower volumes in domestic commercial markets, but volumes in the agricultural sector should increase given the good rains.

This should enable the company to increase exports and with its ongoing focus on reducing overhead and levels of working capital, it should achieve earnings growth.

The company’s turnover increased by 41 percent from $902.8 million to $1.3 billion.

Although the company says the highlight of the year was the private placing of 97.5 million shares with Nampak which resulted in a cash injection of $183.6 million which “enabled the group to extinguish its borrowings” the company still paid $20.1 million in interest charges up from $12.1 million the previous year.

Its current liabilities increased from $249.3 million to $331.7 million although short-term borrowings dropped from $82 million to $15 million.

The company says the interest charge was higher than originally expected because the group remained in a borrowed position for almost the entire financial year after warrantholders passed their option to subscribe for shares in the company in February because of the low share price.

The company also spent $39 million on capital expenditure with the largest project being the commissioning of the second phase of the board machine upgrade at Corrugated products.

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