HARARE — Amalgamated Regional Trading Holdings (ART) suffered a sharp contraction in battery volumes during the third quarter of 2026, with production and sales constrained by working-capital shortages, weaker replacement demand and intensifying competition from cheaper imports.
The Zimbabwe Stock Exchange-listed diversified industrial group said battery volumes in Zimbabwe fell 26 percent year-on-year in the quarter ended June 2026, reversing some of the recovery recorded during the first half of the financial year.
According to Equity Axis News, the deterioration was driven by several simultaneous pressures, including constrained liquidity, supply-chain disruptions and weaker-than-expected demand for replacement batteries.
The Energy Storage division nevertheless remained profitable at operating level, with restructuring initiatives, tighter cost controls and a more favourable product mix helping to cushion the impact of lower volumes.
Working capital becomes the critical constraint
ART’s battery operations ran at approximately 62 percent capacity utilisation during the quarter, leaving significant unused manufacturing capacity.
Management has identified working capital as the principal obstacle to increasing production, particularly the availability of funds for raw materials and inventory.
The constraint is significant because the group already has an operating manufacturing base capable of producing more batteries. A sustained recovery therefore depends less on immediate expansion of physical capacity and more on restoring liquidity sufficiently to keep factories supplied and finished products available.
“Working capital constraints, lower scrap collections and supply-chain disruptions continued to limit production,” Equity Axis News reported in its analysis of the trading update.
The situation represents a reversal from the second quarter, when Batteries Zimbabwe returned to profitability after local volumes increased 3 percent and exports recovered 10 percent.
Demand recovery fails to materialise
ART had anticipated stronger replacement-battery demand during the quarter, but the expected seasonal increase failed to emerge.
Economic activity in agriculture and mining improved, yet this did not translate into a corresponding increase in battery purchases. Tight liquidity among consumers and businesses continued to affect purchasing decisions.
At the same time, cheaper imported batteries gained market share across regional markets.
This creates a difficult competitive equation for ART. While its domestic manufacturing operation faces internationally priced inputs and supply-chain pressures, imported competitors are increasingly able to compete on the final selling price.
Equity Axis News said “lower-priced imported batteries gained regional market share”, adding another layer of pressure to ART’s already constrained operating environment.
Zambia remains under pressure
ART’s regional operations also continued to struggle.
Battery volumes in Zambia fell 16 percent during the third quarter and were down 9 percent over the nine months.
The group said restructuring and tighter cost management had improved the performance of the operation, with management concentrating on rebuilding market presence and improving product availability.
The Zambian weakness is particularly important because regional exports provide ART with an avenue to utilise manufacturing capacity beyond Zimbabwe’s domestic market.
However, exports themselves remained under pressure. Battery export volumes were 24 percent below the prior-year level over nine months, partly reflecting ART’s decision to prioritise collections and orders capable of generating sustainable margins.
ART tightens credit as risks increase
The group has also become more selective about the quality of business entering its distribution network.
ART tightened credit terms in parts of the informal market as collection risks increased. While the approach reduced volumes, management said it lowered exposure to potentially poor-quality receivables.
That decision highlights the trade-off facing the group: pushing volumes aggressively could increase sales but simultaneously weaken cash conversion and expose the business to higher credit losses.
For a company already constrained by working capital, improving the quality of cash generation can be more important than maximising reported sales volumes.
Group turnover comes under pressure
The combination of lower battery volumes, weaker demand and tighter credit conditions affected the broader group.
ART’s total sales volumes declined 15 percent in the third quarter, leaving nine-month volumes 3 percent below the comparable period.
Quarterly turnover fell 9 percent to US$7.06 million, from US$7.79 million previously, while nine-month turnover was broadly unchanged at US$21.34 million.
The figures point to a business that has managed to protect profitability in parts of its operations through restructuring and cost discipline, but has yet to restore the volume growth required to unlock its manufacturing capacity.
Q4 becomes a test of the recovery strategy
For The Zimbabwe Financial Mail, the central investment question is whether ART can convert operational restructuring into a sustained recovery once liquidity constraints begin to ease.
Market analysts told the publication that the company’s 62 percent capacity utilisation provides a useful indicator of both the problem and the potential opportunity.
“ART does not appear to have a fundamental shortage of manufacturing capacity; the immediate issue is the ability to finance production and maintain adequate inventory,” one equity-market analyst told The Zimbabwe Financial Mail.
Another business analyst said the Q4 performance would need to demonstrate an improvement across several indicators rather than simply higher production.
“The important metrics will be capacity utilisation, battery volumes, stock availability and cash conversion. Higher production without corresponding demand and cash generation would not constitute a meaningful recovery,” the analyst said.
Competition complicates the recovery
ART’s recovery is also taking place in an increasingly competitive regional battery market.
Imported products are gaining ground partly because of their lower prices, while ART continues to contend with internationally priced inputs. This means that restoring production volumes alone may not be sufficient to recover margins.
The company will need to balance higher utilisation with product pricing, procurement efficiency and working-capital discipline.
For investors, this makes the final quarter particularly important. If improved liquidity allows ART to raise utilisation materially above the 62 percent recorded in Q3 while maintaining margins and collections, the group could begin converting its existing manufacturing footprint into stronger earnings.
Failure to achieve that progression would suggest that working capital, although a major constraint, is only one component of the group’s wider competitive challenge.
The immediate test is therefore straightforward: ART must turn liquidity into production, production into sales and sales into cash. The extent to which it achieves that sequence in Q4 will determine whether the restructuring programme marks the beginning of a durable recovery or merely provides temporary protection against a deeper volume decline.
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