Zimbabwe Stock Exchange-listed Amalgamated Regional Trading (Art), principally a paper manufacturer, including stationery and tissue converting, has posted positive financial results notwithstanding the harsh economic conditions under which companies are operating in the country.
In a statement accompanying the group’s reviewed abridged half year financial results for the six months ended 31 March 2020, Art board chairman, Thomas Utete Wushe, said the results were achieved under hyper-inflationary conditions while advising caution on the interpretation of financial statements.
Art revenues for the half-year increased by 97% (inflation-adjusted) and 921% (historical) on the back of volume increases and replacement pricing.
Export revenue increased by 23% in US Dollar terms compared to the same period last year while the group’s overall volumes for the half year grew by 10% compared to prior year with growth being driven by automotive and industrial batteries.
“The improved power supply in the second quarter enabled the group to sustain the momentum in the batteries business,” said Wushe.
“The improved efficiencies following the furnace upgrade have increased capacity and created a strong platform to pursue untapped value opportunities in the industrial and solar sectors. Pen sales volumes increased by 11% for the period compared to prior year. Volumes were driven by aggressive selling effort during the back to school period. Capacity utilisation increased by three percentage points to 69% from prior year.”
Timber half year sales volumes, Wushe said, increased by 27% compared to the same period last year.
Trading partnerships improved product availability and range while gross profit margins increased by two percentage points from the prior year to 56% due to improved sawn timber volumes.
“The group delivered positive results despite the power shortages, a rapidly depreciating local currency and continued foreign currency shortages,” he said.
“The measures taken by the fiscal and monetary authorities in response to the deteriorating economic conditions did not have much impact on containing inflation and the prevailing multiple exchange rates in the market.”
He however said the paper business segment was affected by power shortages and the erratic supply of raw materials.
Volumes decreased by 33% compared to the same period last year.
The Group increased waste paper from Botswana and South Africa during the period in order to sustain tissue production as local waste paper volumes continued to decline.
“The group’s financial position improved during the period following the significant reduction of its foreign currency obligations, “explained Wushe.
“The remaining legacy debt of US$ 459 000 was transferred to the Reserve Bank of Zimbabwe and has been recognised at the prevailing interbank market rate. Net borrowings were contained at ZWL$38 million. The group’s net current asset position improved to ZWL$53,7million from a net current liability position of ZWL$57,7million at the end of September 2019.”
He added: “Our efforts to preserve value by timeously adapting to the changes in the operating environment are reflected in the increased monetary gain of ZWL$69,5million during the period.”
Capital expenditure for the period amounted to ZWL$24 million and was primarily focused on addressing back-up power and furnace efficiencies.”
