Printing and packaging giant, Hunyani, recorded a 30 percent increase in operating income in the six months ending April rising from $39.7 million last year to $50.1 million but a heavy interest burden saw the profit attributable to members only increasing by two percent from $24.7 million to $25.2 million.
Net interest paid increased seven-fold from $2.1 million to $14.7 million. According to the company’s interim results, turnover increased by 22 percent during the period and operating income by 30 percent because of the reduction in overheads due to the restructuring exercise at the end of last year.
The company was, however, saddled with a debt of $91.7 million because most warrant holders decided not to exercise their warrants in February. The interest burden eliminated the gains at the operating level.
Because of the crippling interest charges, the company is negotiating with an industry partner for a capital injection “that will more than extinguish current borrowings”.
It says an agreement has already been concluded and submitted to the appropriate authorities for approval.
The company however says the medium-term view of the economy is pessimistic with expectations of continued currency instability, high inflation and interest rates.
It says disposable incomes for consumers have been eroded and this will affect many of the company’s customers who are selling into the consumer market.