Exports, improved product availability drive ART’s Q1 earnings

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  • Overall volumes increased by 26%
  • Group relying on export earnings to sustain raw material supply
  • This is despite relative stability of the official exchange rate
  • Revenue grew by 23% in inflation adjusted terms

HARARE – Amalgamated Regional Trading (ART) Corporation’s revenue increased by 23% in the quarter ended 31 December 2020 (Q1 FY2021) compared to a year ago. The Group’s performance during the period was fuelled by improved product availability which contributed to an overall sales volume increase of 26% coupled with a positive run in the export market.

Export earnings increased by 7% compared to the prior year, providing a hedge against economic volatilities experienced on the local market.

In a statement accompanying the trading update, ART Chief Executive Officer, Milton Macheka highlighted that despite the relative stability of the exchange rate on the foreign currency auction system, the Group continued to rely on its export earnings and local free funds to sustain raw material supply.

“The supply of electricity improved during the period although the cost continued to escalate as prices were aligned to the prevailing foreign currency auction rates,” he said.

Listed on the Zimbabwe Stock Exchange (ZSE), ART is involved in manufacturing and retailing lead-acid batteries, stationery, hygiene products, and Forestry resource management. Its operations are largely based in Zimbabwe and Zambia.

The battery segment recorded a 48% increase in sales volumes while battery export sales volumes were 5% ahead of the prior comparative period.

Chloride Zambia volumes increased by 7% compared to the same period last year as a result of improved product availability and distribution.

The Paper divisions, Kadoma Paper Mills and National Waste Collections were adversely affected by the COVID 19 pandemic and the measures instituted to contain transmissions by the Government.

Mr. Macheka said that sales volumes recovered from the low prior-year levels by 46% at Kadoma Paper Mills and 69% at National Waste Collections mainly due to the improved power supply.

“The business performance however was affected by the high cost of raw materials, fuel, and electricity,” he said adding that “Waste paper imports were increased as availability of paper in the local market remained a major challenge.”

Softex and timber volumes increased by 4% and 5% respectively relative to improved supply of raw materials and firm demand for structural timber.

Meanwhile, Eversharp volumes declined by 22% due to the continued closure of schools as part of COVID-19 lockdown measures.

On the Outlook, Mr. Macheka said the Group anticipates its overall performance to remain positive despite mixed challenges in the economic environment with the paper and stationery sales volumes expected to remain subdued.

“Measures taken to contain costs, harness foreign currency from exports and domestic free funds, whilst scaling down investment to preserve cash will enable the Group to sustain operations,” he said.

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