- Prioritising debt reduction: The Company is focusing on lowering debt levels
- Despite these difficulties, ART's various business units have shown resilience
- Strategic focus on higher-margin businesses: The Company aims to invest in higher-margin businesses to mitigate risks
Harare- ART Holdings Limited has announced a renewed focus on debt reduction as it navigates a challenging economic environment marked by persistent inflation, currency instability, and crippling electricity power cuts.
These headwinds have significantly impacted the company's operations, driving up costs and possibly, contributing to an increase in debt levels.
The 2022 annual report revealed a rise in the debt-to-equity ratio from 10% to 12%.
The ongoing power cuts and shortages of foreign currency have added a significant burden, disrupting production schedules, increasing reliance on expensive alternative energy sources, and ultimately driving up operational costs.
Despite these challenges, ART Holdings' various business units have shown resilience and adaptability.
The Energy Storage division saw a positive 5% growth in volumes, reaching 93,523 units, driven by improved product availability and reduced currency fluctuations. The division's focus on quality and wider sales support led to increased demand for maintenance-free and larger batteries, differentiating them from sub-standard imports.
However, the division has also experienced increased pressure on pricing from imports due to the impact of currency reforms and reduced liquidity in the market.
Meanwhile, the Stationery and Paper division faced challenges due to currency conversion delays, resulting in a 26% decline in pen volumes.
However, the Group's proactive response through increased trading of stationery and paper lines from India and South Africa resulted in a 10% growth in trading revenue, mitigating the impact of raw material and power supply shortages.
Mutare Estates demonstrated resilience with a 21% increase in timber sales volumes, driven by strong demand for structural timber. Despite competition, margins remained firm, and the resumption of customized pallet production further bolstered the division's performance.
Looking ahead, the company's focus on debt reduction will provide the necessary headroom to navigate market headwinds and invest in higher-margin businesses.
This strategic approach aims to mitigate risks and position ART Holdings for future growth.
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