- Volumes decreased by 3%
- Revenue increased by 39%
- Exports declined by 17%
The graph below shows the Group's Q1 mixed production perfomance in percentage
Harare- Zimbabwe Stock Exchange (ZSE)-listed outfit, ART Holdings recorded mixed performance during the first quarter to FY2023 with depressed volumes due to deficiency in raw materials uptake despite an increase in revenues.
Amalgamated Regional Trading Holdings Limited (ART) manufactures and distributes products in three key categories paper products, stationery and batteries.
Its product portfolio is diverse ranging from tissue paper, sanitary ware and disposable napkins to writing pens and automotive, solar and standby batteries under the brand names Exide, Eversharp, Softex and Chloride. The company also has substantial interests in timber plantations and offers forestry resources management services.
The Group’s volumes declined by 3% impacted by reduced plant availability resulting in significant under recoveries, particularly at the Mill.
This resulted in exports declining by 17% as orders could not be met. Failure to meet orders was caused by a number of factors, including erratic power and water supplies and disruption of global supply chains. Local headwinds slowed production while global headwinds impacted production itself.
However, revenue was 39% up and margins remained strong.
Revenue was spurred by the increased local battery and pen sales despite the intermittent supply gaps arising from outages in power and water supplies while margins were spurred as costs have generally been recovered from customers with
However, the commercialization of the new Tissue Mill was affected by the unprecedented power challenges during the period with the delay necessitating additional support from lenders to ease the strain on the Group.
As a result, paper volumes decreased by 10% compared to last year as the anticipated efficiency improvements from the recapitalisation program were delayed.
The Mill continued to rely on imported waste paper as the recovery of local collections remains slow.
The Group however said the consolidation of the Mill, Waste Collection and Paper converting businesses to reduce operating costs is almost complete and will enable the segment to compete in the export market where demand remains firm.
“Pre-production and engineering cash costs related to the Mill and the Converting equipment will necessitate increased borrowings in the short term,” the Group said in a trading update.
Overall volumes for batteries were 1% lower than the prior year whilst export volumes fell by 13% on account of product shortages.
“The division was cushioned by the greater inventory holding levels which had been put in place in response to the global supply chain disruptions.”
Eversharp Volumes increased marginally by 5% from last year as opportunities to meet increased local demand were lost due to delays in receiving imported raw materials in December. The Group failed to meet its export target.
Despite the failure to meet exports, the retooling of the Eversharp division which had been held back was completed in December and this will ensure increased pen production capacity to avert product supply shortages.
Mutare Estates timber volumes declined by 29% during the period as the focus remained on sustainability. However, value addition and seedling projects enabled the division to maintain its revenues and profitability.
In the outlook, the group said, “We anticipate that the environment will remain complex and challenging as measures to eliminate distortions, stabilize the local currency and tame inflation are maintained.”
It added, “However, the improved power supply will enable the optimization of the paper projects.”
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