Source: ART sales volumes jump 30pc | The Herald
Nelson Gahadza
Senior Business Reporter
LISTED stationary, paper and batteries manufacturer, Amalgamated Regional Trading (ART) Corporation says sales volumes across all divisions grew by 30 percent in the year ended September 30 2021, compared to prior year.
Group chairman Thomas Wushe said financial performance for the year was impacted by Covid-19 induced restrictions and the economic after effects, but the batteries segment remained resilient and helped to offset the underwhelming performance of the paper divisions.
“As a result, revenue increased by 27 percent to $4,99 billion in inflation adjusted terms compared to $3,94 billion prior year as demand recovered,” he said in a statement of the financials.
Mr Wushe said during the period under review, the sharp inflation-induced input costs increases could not be aligned to pricing, resulting in a significant decrease of gross margins to 39 percent from 52 percent in the prior year.
The group’s operating expenses increased by 66 percent due to general inflation driven increases in costs and initiatives taken to stimulate demand and cushion employees.
Mr Wushe said significant fair value losses on biological assets and investment properties amounting to $191 million and $54 million respectively were recorded.
He said during the year, the group took significant strides in restructuring the paper business following the acquisition of Nampak’s 50 percent shareholding in Softex and purchase of a Toscotec Tissue Machine from Twinsaver (South Africa) during the year.
“These investments are a result of the difficult trade off decisions taken to mitigate the long term consequences of delaying critical capital expenditure and mark a pivotal moment in ART’s Paper business restoration initiatives,” Mr Wushe said.
He noted that the installation of the tissue production machine the Kadoma factpory was progressing well and expected to be completed in the second half of the financial year.
“The group’s financiers supported and enabled these key strategic projects which will enhance competitiveness and create holistic value across the paper chain,” said Mr Wushe.
In terms of divisional performance, at the group’s batteries division, strategic investments to increase capacity and expand the distribution network were vindicated as the automotive battery demand remained strong.
“The performance was ahead of recovery expectations, as volumes increased by 39 percent despite supply chain disruptions,” Mr Wushe said.
He said the division’s export volumes were driven by the recovery in Zambia. He noted that capital expenditure was limited to essential spend as the efforts to preserve liquidity continued.
The Paper Sales volumes for Kadoma Paper Mills and National Waste Collections increased by 27 percent and 13 percent, respectively, albeit coming from a low base.
Wushe said Softex volumes were reduced by 9 percent. “The performance of the Paper divisions was affected by the intermittent supply of raw materials and spares. The resultant commercial downtime adversely impacted fixed cost absorption, operating efficiencies and profitability,” he said.
At Eversharp, volumes increased by 35 percent as Covid-19 induced restrictions were eased and school calendar disruptions reduced.
Mr Wushe said the momentum of the division in the second half of the year was remarkable despite the increased presence of competing imported products.
“Productivity and quality was not significantly affected by the delays in obtaining spares and raw material during the period,” he said.
Mr Wushe said the Mutare Estates business remained unaffected by the pandemic and capitalised on the firm timber market demand.
He said saw milling capacity was increased during the year and has enabled the division to increase its milling partnerships. Looking ahead, Mr Wushe said the underlying demand for the group’s core products remained robust and focus on the changing consumer preferences and emerging technologies will be key in sustaining the Group’s strong performance in the market.
He said the successful completion and settlement of Nampak’s shareholding in Softex as well as the completion of key factory upgrades in Chloride will create much needed liquidity headroom to enable the Group to complete the capitalisation of the Paper business.
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