Art partners Botswana-based firm . . . Company eyes export-led growth . . . Kadoma Paper Mill now operating full throttle
Amalgamated Regional Trading (ART), has secured a partnership deal with a Botswana based firm for the distribution of its products in the Southern African country to increase volume growth as well as cutting distribution costs, as the paper and packaging group eyes export led growth.
Chief executive officer Milton Macheka said the company`s battery manufacturing division, has also made headways in terms of exports with the firm now exporting to Zambia, Malawi, Botswana and Mozambique, controlling a market share of about 40 percent and 25 percent of the Zambian and Malawian markets respectively.
“The Chloride export project is performing reasonably well. We are in Zambia, Malawi and we have started venturing into Botswana and Mozambique. We are excited about the prospects in Mozambique in particular given the fact that there are a lot of imports in Mozambique and there is an opportunity to grow the business in certain areas.
“In Zambia, we are sitting on a market share of about 40 percent, in Malawi we are just hovering around 25 percent, Botswana and Malawi like I have said it’s still exploratory. We are new players there, defiantly we are looking at ways of growing our footprint in the Botswana market and so far we are identifying distribution channels and partners that we can partner to grow the businesses there.
“In Botswana we have made headways in securing a partner the only complication is that the partner requires their own brand so we have since finalised the branding issues.
“It is a big distributor with a good footprint across the country and we are excited by this development because the partnership will entail volume growth mainly, but effectively it will lower the distribution costs,” Macheka told Business Weekly on the sidelines of the company’s annual general meeting this week.
Kadoma Paper Mill plant now operating at full capacity
Meanwhile, Art’s Kadoma Paper Mill plant is now operating at full capacity as the retooling exercise made by the group begins to bear fruit with the entity registering strong performance.
In 2017, the packaging concern committed to invest upward of about $20 million towards revamping of Kadoma Paper Mill and Softex.
Macheka told Business Weekly that investments made on the delinking plant in 2017 were accruing benefits as paper quality had significantly improved and the company had managed to clear outstanding debts to local authorities.
“The Kadoma Paper Mill is performing very well; in fact, you will probably recall that some three to four years ago we invested in a delinking plant. The intention of that was to improve the paper quality in terms of whiteness and runnebility of the paper.
“We achieved that and we have gone on to improve our procuring efficiencies so in fact at this stage Kadoma is one of our strongest businesses. We have since done away with Zesa’s long standing debt which makes us very excited, so we are now focusing on the City of Kadoma rates, we think that by half year we will have completed the outstanding debt which stands at about $180 000.
“In terms of throughput we are now operating the plant at capacity, which is about 17-20 tonnes a day of fine paper,” said Macheka.
Volumes up 20 percent
On the financials, Macheka highlighted that the group recorded an improvement of 20 percent in terms of sales volumes although public unrest which occurred in the January affected operations.
“It has been a packed five months, starting off with events in October 2018 and the monetary and fiscal announcements affecting the business especially in terms of trading, turnover for the period stands at $23 million, sales volumes across the businesses softened by about 20 percent with the exception of the tissue businesses where we recorded some growth.
“Disturbances continued in January, we had some unrest, so our trading was subdued during that period in fact in other instances completely stopped, gross margins for the period were at 41 percent they were against the prior of 44 percent. Challenges continue in the environment especially in respect to foreign currency shortages and the depressed demand.
He added that despite the country’s challenging operating environment the group`s focus still remains on topping $50 million turnover.
“Looking forward to the remainder of the year the recent announcements are still a close call. As a business, we are obviously still monitoring the situation to make an assessment as the year progresses, but we are still hopeful that we should be able to vet our focus.
“We had initially budgeted to top $50 million turnovers by the end of the year and we are confident that we will be able to do that. Exports remain strong especially in the battery business and in paper,” he said.–ebusinessweeklycozw
