ART sees 13% drop in turnover as flagship batteries underperform
HARARE – Art Holdings says that low sales volumes across its operations have resulted in a 13% decline in turnover in the year to January 2025, to US$11 million from US$13 million in the comparable year ago period.
CEO Milton Macheka told the AGM this afternoon that demand in the four-month period since year-end had been subdued following sustained monetary and fiscal contractionary policies and raw material outages during the period.
Chloride Zimbabwe volumes were 3% lower at 83,783 units against a budget of 149,999. Zambia volumes were 24% lower at 24,280 units.
Macheka said working capital challenges affected raw material availability for most of the lines at Chloride leading to lower sales volumes. Zambia was affected by competition, product availability, and challenges in repatriating payments. These repatriation challenges were also seen in Malawi and Mozambique.
Eversharp saw a 14% decline, while Mutare Board & Paper Mills saw a 4% increase as it took advantage of the rising demand for construction timber across the country. Eversharp volumes were affected by challenges in the retail sector following the sustained exchange rate issues and contractionary monetary and fiscal policies, which also affected overall demand at large.
The group had now mothballed Kadoma Paper Mills but Softex trading was on course during the first quarter, although affected by working capital challenges and delivery delays in Q2
Gross margins declined from 38% to 35%. “This was due to period costs, which do not vary directly with volumes and take time to adjust.”
Operating expenses at US$3.8 million were 7% below the previous year as efforts to realign costs with declining volumes started to take shape, but still lagging the volumes and turnover declines during the period.
A modest operating profit of US$248,000 was recorded, a decline against US$817,000 achieved prior year. Macheka acknowledged the impact of these subdued profits on operating cash flows, prompting the company to secure critical loans from two financial institutions, one for three years (US$1 million) and another with a shorter tenure (US$500 000). This helped to ease the cash flow pressures. Negotiations for disposal of idle land progressed well with deal closure on the horizon.-finx
