- ART Holdings reported a 13% decline in sales volumes and an 11% drop in revenue for Q1
- The Group is exploring opportunities in the hygiene segment
- Expected disposal of underutilized assets will help the business meet obligations and fund key capital expenditures
Harare- ART Holdings has reported a challenging first quarter for the three months ended December 31, 2024, with both sales volumes and revenue experiencing significant declines. Sales volumes decreased by 13% compared to the prior year, while revenue followed suit with an 11% drop.
The Group attributed this performance to a difficult trading environment characterized by constrained liquidity, inflationary pressures, and policy uncertainties.
All units posted depressed volumes except Mutare Estates and for the Stationary and Paper segment, the Group’s paper milling operations remained mothballed due to unfavourable conditions, leading to exploration of opportunities in the hygiene segment to diversify and enhance contributions.
The first quarter of the financial year was marked by a tight liquidity environment as the government implemented measures to stabilise ZWG performance and mitigate inflation.
“The first quarter was marked by constrained liquidity with moderate movements in exchange rates and inflation.
“The authorities remain focused on leveling the playing field and bringing more predictability to the operating environment,” stated the Group in a trading update.
The tissue and stationery sectors were particularly impacted by liquidity challenges in the formal sector, exacerbating working capital constraints. However, tissue trading opportunities initiated in the previous year showed promise and are set to be scaled up.
The battery segment faced significant headwinds, with volumes declining by 12% compared to the prior year due to supply chain disruptions and power shortages, although product availability improved towards the end of the quarter.
Pricing disparities and ongoing liquidity constraints continued to affect sales volumes, prompting the Group to reassess its distribution model to better align with the changing operating landscape.
The Eversharp brand saw a 17% decline in volumes, driven by pricing disparities in the formal sector and competition from counterfeit, low-quality imports.
In contrast to other divisions, the Mutare Estates division delivered a strong performance, recording a 16% growth in volumes compared to the previous year, supported by firm demand for structural timber that enabled the business to maintain robust margins.
ART Holdings has implemented measures to reduce risk and enhance cash generation, which are expected to assist the Group in navigating the challenges associated with scaling back and restructuring operations.
The support extended by financiers, coupled with the anticipated disposal of underutilised assets, will enable the business to meet its obligations and fund key capital expenditures and trading initiatives.
Looking ahead, the Group’s outlook remains cautious, with expectations of continued liquidity constraints and a complex economic environment.
However, proposed regulatory interventions aimed at improving trading conditions in the formal sector could provide some relief.
ART Holdings’ focus on cost optimisation, debt servicing, and capital expenditure in critical areas reflects a prudent approach to overcoming current challenges.
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