Battery export market charges Art Corporation
ART Corporation (ART) says the group remained resilient despite the challenges in the economy and registered moderate volume growth across its business units during the half-year ended March 31, 2022.
ART is the holding company of a manufacturing group of businesses in Zimbabwe with distribution operations in Malawi, Zambia, Zimbabwe and South Africa.
It is involved in the manufacturing and retailing of lead-acid batteries, pens, stationery, tissues, hygiene products and forestry resource management.
The group’s units include Chloride Zimbabwe, Chloride Zambia, Exide Express, Eversharp, Kadoma Paper Mills, National Waste Collection, Softex Zimbabwe and Mutare Estates.
Dr Thomas Wushe, the group’s chairman, in a statement of the financials, said during the interim period, demand for batteries in the region remained strong and the favourable trading conditions in the Zambian market anchored the strong export performance.
In terms of financial performance, the group’s revenue increased 18 percent to $3,60 billion compared to $3,04 billion in the prior year.
Dr Wushe said overall volumes for the period grew by 9 percent, with a strong performance from the battery export market and volume recovery in all the paper units.
In terms of historical turnover for the period, revenue grew 100 percent to $2,95 billion from the prior year reflecting the impact of increased foreign currency sales recorded at the prevailing official market exchange rates.
According to Dr Wushe, gross margins declined by five percentage points to 34 percent reflecting the impact of increased export volumes and the general increases in input costs.
He said overall, margins remained strong as stringent cost control was maintained across the divisions.
Dr Wushe noted that the battery business performance in the local market was subdued during the period due to the cumulative impact of the pandemic which exacerbated already high levels of pressure on consumers from inflation and currency instability.
As a result, total battery volumes increased by 6 percent compared to prior year. Dr Wushe said the paper business segment volumes recovered as the foreign currency auction market induced pricing distortions reduced in the second quarter.
He said that the relentless focus on supply chain improvements and cost efficiencies yielded positive results. Paper volumes increased by one percent compared to the prior year Dr Wushe indicated that Eversharp performed well on the back of strong demand driven by the year-end national examinations and back-to-school preparations and volumes increased by 39 percent compared to the prior year.
Mutare timber volumes increased by 10 percent compared to the prior year and harvesting was affected in the second quarter by incessant rains, but timber demand remained firm. On ongoing projects, Dr Wushe said the installation of the tissue mill and the new tissue converting line in Kadoma is progressing well and is expected to be complete by year-end.
Dr Wushe said the Board is fully aware of the challenges that lie ahead to secure raw materials and sustain production given the prevailing environment but the Group believes that this investment puts it at a critical inflection point and will approach the challenges and the new realities of doing business with a positive and proactive mindset.
The Art Board chair added that the group remains confident in the Group’s resilience and ability to work with strategic stakeholders to mitigate risks and unlock opportunities in the markets.-The Herald
