ZSE Listed manufacturer of papers, pens and lead acid batteries, Amalgamated Regional Trading (ART) recorded a significant drop in export volumes during third quarter (Q3) to June 2022 after failing to meet orders due to erratic supply of power and raw materials.
The group distributes its products across the Southern African sub-region.
Zimbabwe has been experiencing serious power shortages due to limited generation and breakdown of aged equipment at the country’s second largest power station, Hwange.
In its Q3 trading update, the group subsequently reported a 28 percent decline in earnings for the quarter.
“Export volumes declined by 6% as orders could not be met due to raw material shortages and the erratic supply of power. Revenue for the quarter declined by 28% in inflation adjusted terms compared to the prior year.”
Furthermore, market distortions continued to present pricing challenges for the company as the local currency accelerated its downward route.
The auction market backlogs worsened, and raw material imports were sustained utilizing foreign currency generated from trading.
The volume growth momentum for batteries slowed as volumes increased by 2 percent during the quarter compared to the prior year.
The volumes for the paper division fell by 26 percent compared to the prior period with gains made in the first half being reversed due to raw material shortages, erratic power supply and major breakdowns at the Mill.
“The export order book remained firm however viability is threatened by the unfavourable export proceeds retention policies and requirement for exporters to pay for electricity in foreign currency given the prevailing market distortions,” the company said.
Eversharp volumes for the quarter increased by 29 percent as local demand remained firm with improved foreign currency generation enabling timeous importation of inputs and the trading of supporting stationery lines.
Timber volumes increased by 5 percent during the period compared to prior year with sawmill downtime affecting structural timber output.
The installation of the new Tissue mill and converting line in Kadoma remains on course for commissioning before year end with wastepaper collection network being expanded in the region to improve raw material availability.