ART sales down 13pc despite battery segment improvement

ART Corporation says relative exchange rate stability and improved power availability enhanced its battery segment operations in the first quarter ended December 2024.

According to ART, these improvements particularly enabled stocking and improved product availability in the battery segment.

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

In September 2024, the Reserve Bank enforced a tight monetary policy stance by increasing the Bank Policy Rate and statutory reserves to mitigate inflation and exchange rate risks.

This move successfully alleviated inflationary pressures from October 2024 onward, 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.

Consequently, this impacted ART Corporation’s operations given liquidity shortages.

“The relative exchange rate stability and improved power availability towards the end of the period enabled stocking and improved product availability in the battery segment,” said ART chief executive officer Mr Milton Macheka in the group’s first quarter trading update to December 2024.

Operationally, the group’s overall sales volumes declined by 13 percent compared to the 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, while 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.

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

Firm demand for structural timber enabled the business to maintain strong margins during the period, while the delayed rainy 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 indicated that it expects the economic environment to remain complex and challenging, with constrained liquidity.

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