In this article, we will analyse the current performance of Amalgamated Regional Trading Limited (“the company, or “ART Corp”) as the base performance at which It will enter the looming recession. The article will then move to analyse the performance of the company in preceding recessionary periods, as a means to approximate its general performance in times of declining demand. Finally, we will consider the arbitrary factors that may cause ART Corp’s performance in the coming recession to deviate from its prior recessionary performance. The purpose of this investigation is centered on the idea that past performance is useful in predicting future performance. By understanding the how and why of ART Corp’s performance in prior recessions we can gain insights on how they are likely to perform in future recessions.

In the last few years, Art Corp has faced many challenges that have limited its scope of investment. From product range expansion plans that had to be postponed to export opportunities that were foregone due to policy inconsistencies, the company failed to sufficiently utilize its capacity. Thecompany’s 2022 annual statements for the year ended September 2022 reported an increase in gearing of 2%, thereby increasing the debt-to-equity ratio from 10% to 12%.This puts pressure on the future earnings of the company and chokes future investments since repayment of the loans will be calculated according to the interest rate set by The Reserve Bank of Zimbabwe. Although the rate was revised downwards to 150% in the first MPC meeting of 2023, this remains high by regional standards. Moreover, given the willingness shown by the government to aggressively and swiftly increase interest rates sharply in response to inflation, increases in debt obligations pose significant risks to growth opportunities. Already, the company has temporarily deferred some of its projects, such as the broadening of its product range within the batteries business unit, thereby forgoing the opportunity to increase its share of the growing batteries market. The driver of the increase in borrowing was the completion of the Paper Mill project in Kadoma which the company expects to future-proof the group’s performance. The paper business unit was the big loser in terms of volumes in the period in review. On the back of a 15% decrease, the completion and commencement of production in the Kadoma Paper Mill areexpected to improve volumes. For the investment to beworthwhile, the improvement in volumes must result in an increase in earnings that exceed the cost of loan repayments used to finance the paper mill, all within a time horizon that is acceptable to the average creditor.

Overall volumes within the period in review grew by 10%,and overall export volumes increased by 12%. The latter wasdriven by strong demand from Zambia. The big winner, in terms of volume growth, was the stationary business unit which grew by 39%. Eversharp, the brand name of the stationary unit, saw an increase in export volumes of up to 177% from the prior year due to the low base of 2021 and the recovery owing to the easing of global lockdown regulations. Moreover, the business unit significantly supported the company’s foreign currency through sales in the informal sector which benefits from sales with favourable terms. Thiswas useful in the improvement of raw materials and spare parts availability in the second half of 2022.

Overall revenues for the year 2022 were ZWL 19.6 billion, an increase of 3% from the ZWL 19 billion recorded in 2021. Revenue performance was supported by increases in prices that were in line with inflation. The price inelasticity of the company’s product range can be assumed by the ability to increase prices while still observing increases in volume.Product inelasticity is a safeguard attribute during times of recession. It is advisable to gear a product mix towards the production and trading of such product categories to weather economic contraction. Profit for the period stood at ZWL 1,46 billion compared to the loss of ZWL 2.5 billion in the prior year-2021.


The year 2019 and 2020 were both recessionary periods, in which the Zimbabwean economy contracted by 6.5% and 5.3% respectively.

In 2019, overall volumes contracted by 18% as a result of foreign currency shortages and liquidity constraints. However, export volumes for batteries and paper increased by 4% and 7% respectively, on the back of consistent product availability and increased selling effort in Zambia and Malawi. Moreover, volumes for solar and industrial batteries increased by 12% from the prior year. The drive at Softex to expand its product range yielded positive results with volume increases of 8% for both hygiene and femcare. Prices were adjusted following the rising cost of production thereby allowing revenue to increase to ZWL$267 million, from ZWL$212 million.

Subsequent to the increase in the number of Exide Express branches, the company increased the number of employees from 802 to 864 but failed to utilize this increase in labor to increase capacity utilization. This is likely due to the frequent power shortages faced by the country during the period.Despite the challenges, the company was able to achieve an increase in profit after tax of ZWL$ 100247000 from ZWL$ 24622000 in the previous period. This was done by the company’s ability to contain operating costs as they decreased from 25% to 23% of turnover.

In 2020, the operational environment was further complicated by the unprecedented COVID-19 pandemic which disrupted global supply chains and constrained demand. Business units remained under pressure to continuously review pricing due to the persistent hyperinflation that characterized the operating environment. However, the company’s overall volumes for the year increased by 8% compared to the prior year. The batteries business segment continued to drive the Group’s performance with battery volumes increasing by 17% for the year. Export volumes increased by 13% for the year as the division managed to grow its presence in the region. The biggest loser within the period, in terms of volume growth, was the paper business unit which contracted by 37% compared to the same period last year.

The continuing effects of the looming global recession are predicted to make the operating environment hard. Hopefully, government actions to control inflation and stabilize the currency rate will be examined in a way that recognizes the importance of assisting the manufacturing sector. With the current inflationary environment and the high-interest ratesbeing set by the central bank, it will be prudent for the company to maintain a low level of debt. To support operations and investments, ART Corp is well advised to increase its cash generation activities. This can be done by increasing their drive further into the regional market.