ART Corp says Q1 stability lifted segment performance

ART Corporation says relative exchange rate stability and improved power availability enhanced the performance of the battery segment during the first quarter to December 2024.

The positive impact enabled stocking and improved product availability, ART chief executive officer Mr Milton Macheka said in the group’s first quarter trading update to December 2024.

This comes as authorities continue to work towards creating a more stable and equitable business operating environment characterised by more predictability.

From September 2024, the Reserve Bank of Zimbabwe enforced a tighter monetary policy stance, increasing the bank policy rate and statutory reserves to mitigate inflation and exchange rate risks.

This alleviated inflationary pressures from October 2024 onwards and as a result, Zimbabwe’s monthly inflation rate plummeted from 37, 2 percent in October 2024 to 3,7 percent in December 2024.

The decline was primarily driven by exchange rate stability, marked by a significant reduction in parallel market premiums.

Resultantly, this positively impacted ART Corporation’s operations given the tight market liquidity.

“The relative exchange rate stability and improved power availability towards the end of the period enabled stocking and improvement in product availability in the battery segment,” he said

Operationally, the group’s overall sales volumes declined by 13 percent compared to prior year while revenue was 11 percent below the prior year as the business sought to adapt to the changing operating environment.

Battery volumes were 12 percent below the prior year as the division faced supply chain and power disruptions.

Eversharp volumes were 17 percent below the prior year as pricing disparities affected trade in the formal sector whilst counterfeit low-quality imports continue to disrupt the market.

This segment was particularly affected by liquidity challenges in the formal sector compounding the difficult working capital situation.

Mutare Estates division continued to trade favourably with volume growth of 16 percent against prior year.

Firm demand in structural timber enabled the business to maintain strong margins during the period while delayed rain season affected planting although there was a significant recovery in January 2025.

The business however continues to work on the vast gumtree resource and has invested in additional equipment to overcome extraction challenges.

Going forward, ART Corporation said it expected the economic environment to remain complex and challenging with constrained liquidity.

The group also indicated that it was banking on the proposed regulatory interventions which are expected to improve trading in the formal sector environment.-herald