Art seeks partner to invest US$2m capital

LISTED manufacturing group Art Corporation is seeking a technical partner to invest US$2 million worth of capital to support the group’s plans to double production by 2015.

Report by Taurai Mangudhla

This comes as the group earlier this year announced a strategy to increase profitability through improved efficiencies by increasing capital expenditure in new machinery and automation in line with the company’s plans to start producing maintenance free batteries by 2015.

The company’s capital expenditure stood at US$586 000 for the 2012 financial year.

Maintenance free batteries, which according to Art, are proving popular with customers the world over are assets that can be a major boost to Art’s business which is currently driven by the battery division, Battery Express.

Art CEO Richard Zirobwa told the company’s annual results briefing for the year to September group after tax profit stood at US$433 000 from prior year loss of US$2,9 million after a 13% revenue growth to US$34,1 million up from US$30,1 million.

At the end of 2013, Art is forecasting turnover of US$40 million.

The group improved operating efficiencies to record a decline in operating expenses to US$9 million from US$9,3 million prior year despite a 7% growth in capacity utilisation to 64% in the period under review.

For the batteries division, Zirobwa said, turnover grew 14% to US$20,6 million to record a pre-tax profit of US$1,8 million from a loss of US$560,000 last year while gross margins increased to 40%.

The batteries division posted a profit for the first time since the country adopted a multiple currency regime in 2009.

“There was revenue turnaround of the battery business especially the factory,” Zirobwa said.

The division’s capacity utilisation had risen to 65% in the year after a US$212 000 investment in factory equipment managed to rid the plant of inefficiencies.

The group’s long term borrowings stood at US$2,6 million.

Gross margins were at 33% against 32% in the prior year mainly due to the 36% production volume increase at the Chloride factory.

Art’s battery manufacturing and distribution division — comprising Chloride Zimbabwe, Battery Express and Solar Express — constituted 60% of turnover at US$20,6million.

The division made a profit before tax of US$1,2 million from a loss of US$560 000 in 2011.

The group’s paper and stationery division — comprising Eversharp and Softex Tissue Products — contributed 35% of group revenue worth US$12 million while plantations accounted for the remaining 5% worth US$1,5million.

The paper and stationary division made a loss before tax of US$268 000 while the plantations made a profit before tax of US$900 000.

Zirobwa said the paper business needs$270 000 for recapitalisation which will make its products competitive.

He said a pending partnership deal with an Indian company, Luxor which is in the business of manufacturing pens, will add to the capacity upgrade and distributorship at Eversharp.

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