•        The group recorded a loss after tax of ZWL 65 million
  •          Finance costs widened by 39%
  •          However, all units registered mild growth 

Harare- ZSE- listed Amalgamated Regional Trading Holdings (ART Holdings)  suffered a loss after tax for the second consecutive time during the half-year ended 31 March 2022 due to a complex economic environment characterised by inflationary pressures, exchange rate volatility, rapid depreciation of the local currency and shortages of foreign currency. 

Though the loss sharply narrowed, complexities in the economy saw the Group fail to record a profit for the second consecutive time to post a loss of  ZWL 65 million during the period under review compared to a loss of  ZWL 783 million recorded during the same period in 2021. 

The Zimbabwean dollar depreciated by over 32% during the period from October 2021 to March 2022 while inflation rose to 60.74% by December 2021 upsetting RBZ's estimates and settled at 72.7% by March 2022, which was a record high since July 2021. Exchange rates remained soaring during the reporting period as scarcity of foreign currency remained a concern. 

Finance costs widened by 39% to ZWL 100 million from ZWL 61 million recorded in 2021 in the same period while total operating expenses soared to ZWL 1 billion from ZWL 839 million last year.

This also had a significant negative effect on the current assets performance which registered a marginal 3% increase to ZWL 2.1 billion while current liabilities stood at ZWL 2.01 billion which is also a great concern to the Group’s viability. 

The Group suffered a shortage of foreign currency to import raw materials, mainly due to the 40% export proceeds relinquished to the RBZ for a local currency at the prevailing auction market rate which is mostly half the real value of the greenback. 

Given that the country already faces scarcity of the greenback and economic votality, surrendering 40% of foreign currency for the ZWL which is under fire from inflationary pressures pose a great threat to the viability of exports business as the local currency quickly loses value. 

“The Group continued to engage the monetary authorities on the unfavourable export proceeds retention threshold which poses a significant risk to the viability of exports,” the Group said in a statement accompanying the half-year financials. 

“The Board is fully aware of the challenges that lie ahead to secure raw materials and sustain production given the prevailing environment.”

 The Zimbabwe dollar is suffering from inflationary pressures due to a lack of confidence in the currency and policymakers themselves. This is resulting in the market resorting to the greenback as a store of value putting immense pressure on the decaying currency. 

“The macro-economic environment remained challenging and uncertain as continued shortages of foreign currency, depreciation of the local currency and the inflationary upcycle dampened market improvements which followed the easing of COVID 19 restrictions,” said the Group. 

However, revenue grew by 18% to ZWL 3.6 billion from ZWL 3 billion recorded last year while all production units registered mild growth. 

Battery volumes increased by 6% while paper volumes by a marginal 1% with timber volumes growing by 10%, heavily affected by incessant rains during harvesting. 

“The battery business performance in the local market was subdued during the period due to the cumulative impact of the pandemic which exacerbated already high levels of pressure on consumers from inflation and currency instability,” the Group said. 

Eversharp division was buoyant at 39% compared to the prior year due to the easing up of COVID-19 restrictions which saw schools re-opening at full capacity. 

“The installation of the Tissue Mill and the new tissue converting line in Kadoma is progressing well and is expected to be complete by year-end,” the group added. 

“The Group believes that this investment puts it at a critical inflection point and will approach the challenges and the new realities of doing business with a positive and proactive mindset.”

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