Listed industrial concern, Amalgamated Regional Trading (ART) returned to profitability in the twelve months to September on the back of timeous price adjustments and cost containment measures against rising operating costs.
The Group managed to deliver a profit after tax of ZW$1.46 billion compared to the loss of ZW$ 2.5 billion previous year.
Export volumes increased by 12 percent compared to prior year driven by strong demand in Zambia.
The Group’s regional drive continues to be anchored by the strong performance of batteries in Zambia and Malawi although foreign currency shortages persisted in the later whilst growth in Mozambique remains slow as competition from imported batteries increased.
“Gross margins recovered during the period on the back of timeous price adjustments and cost containment. Demand for batteries, paper and stationery recovered although significant downtime in the tissue business due to machine breakdowns and power cuts affected production output consequently impacting sales particularly on the export market,” said group chairman Thomas Wushe, in a statement accompanying the company’s financial results.
The Group recorded significant exchange losses amounting to ZWL$ 3.6 billion as the local currency depreciated by 607 percent during the period. Fair value adjustments on investment property and biological assets amounted to ZW$4.9 billion.
The battery performance was affected by supply chain disruptions and availability of power in the first half of the year. Demand on the export market was strong and volumes grew by 12 percent.
“Liquidity constraints in the local market and foreign currency shortages in Malawi necessitated changes in trading terms in order to manage credit risk with a resultant impact on volumes. Projects to broaden the product range were temporarily deferred following the hiking of interest rates and decline in aggregate demand.”
The capitalization and restructuring of the paper business is ongoing despite economic challenges. Installations were completed at the end of September and full commercial production is expected to start after optimization this month.
Volumes overall for paper decreased by 15 percent although export volumes increased by 5 percent. Power supply and the unavailability of sufficient local waste paper remain as the major challenges for the business.
Eversharp volumes increased by 39 percent compared to prior year as volumes continued to recover from last year following the easing of covid restrictions. Export volumes increased by 177 percent.
“Opportunities in the market could not be maximised due to the foreign currency auction allocation backlog. Foreign currency sales in the informal sector enabled the division to improve raw material and spare parts availability in the second half of the year.”
Stationery trading was resumed and contributed 10 percent of total sales. Mutare Estates Timber volumes were held at the same level as the prior year. Demand remained firm, however the environment necessitated changes in trading terms in order to preserve value and reduce credit risk.
