Financial Results for the Six Months Ended 30 September 2019:

  • Group revenue declined by 3% to R2 227m (2018: R2 297m)
  • Revenue in Packaging division increased by 6,4% with good recovery from ITB Flexible Packaging Solutions (ITB), which increased its revenue by 15,7%
  • Net asset value per share increased by 3,1% from 48,1 to 24,8 cents per share
  • Novus Holdings excellent B-BBEE rating sustained

Novus Holdings (JSE: NVS) announced a cautious set of financial results for the half year ended 30 September 2019, due to tougher trading conditions amidst a strained economic environment.

It reported a slight decline in revenue of 3% from R2 297m to R2 227m, as well as a decrease in earnings from 49,4 to 24,8 cents per share.

“While we anticipated tough trading conditions to place pressure on the Group due to the dual headwinds of muted economic growth and the deferment of a portion of a major print project from H1 to H2, we made some headway as we continued to focus on optimising resources to drive sustainable throughput,” said Neil Birch, Novus Holdings CEO.

Overheads were reduced by 10,5% from R371m to R332m and capital expenditure remained modest at R41m; this is despite factors outside of the Group’s control such as the cost of imported  paper and the poor consumer demand environment.

The Print segment experienced lower print volumes, which were exacerbated by margin pressure. The books and directories category and the magazines category were the biggest contributors to this segments decline being down by 13% and 17,6% respectively.

“Pleasingly, the Packaging segment showed an increase in revenue of 6,4% contributing R382m to the Group’s turnover. ITB showed a strong recovery and growth in revenue of 15,7% following industrial strike action, which impacted last year’s results,” said Birch.

Volume growth in Gravure (Labels division) increased by 14,4%. Furthermore, a consolidated effort from the Group resulted in an improvement at the Tissue division, which increased revenue by 19,7%, albeit at neutral EBITDA contribution.

The Group has maintained its Level One Broad-Based Black Economic Empowerment (B-BBEE) rating and continues to prioritise transformation.

“We have been trading with a B-BBEE Level One rating since May 2019, however this was achieved by a narrow margin. We are currently undergoing a re-evaluation exercise and we are certain to retain the level, we have also initiated a parallel process to peer review the B-BBEE metrics to see where to further improve so that our Level One rating is sustainable in the long term.

“We play in sectors where a good B-BBEE rating is important, and there are number of significant contracts we want to retain and secure new ones in the next few months. Even though we know we are very strong in that area, we cannot rest on our laurels,” said Birch.

He added that the focus going forward continues to be on optimising resources in an effort to “baton down the hatches” amidst continued economic uncertainty.

“We expect the Packaging division to positively contribute to the Group revenue going forward, while Labels is growing and expanding its product offering. Where possible, we will continue to further drive operational efficiencies and adjust capacity requirements, while defending and growing market share. We are realistic about the challenges we face and the measures needed in order to counter a further decline. We are committed to growing our business prospects across all our divisions while remaining a sustainable business over the long-term,” concluded Birch.