Controls slow down Art performance


Conrad Dube

DISPARITIES in exchange rate and price controls affecting static price levels has slowed down Amalgamated Regional Trade (Art)’s performance in six months to March 31. Howeve

r, growth in export volumes has helped to negate the effects of a decline in volumes in the local market.


“Generally price controls restricted growth in turnover and reduced margins leading to a decline in volumes but although it may be difficult to grow volumes locally, the business is in a position to grow the export market,” said chief executive officer Richard Zirobwa.


Zirobwa told an analysts’ briefing on the interim results that the group would continue to push local volumes for margins which were better than on the exports.


The group would take advantage of any decline in local demand to push any excess capacity for the export market. Going forward, Art would continue to maximise capacity and to curb high costs of production per unit.


The company would maintain the lowcost manufacturing Zimbabwean base for value addition on products and grow distribution centres in external markets.


The chief executive said exports were earmarked to increase to between 40% and 50%, on favourable exchange rates, to cover import requirements.

Non-Zimbabwe turnover at 36% from 16% of total turnover was up by 838% to help the group post a 323% increase in total turnover to $19,5 billion.


This was from the comparative six months’ $4,6 billion.


Attributable profit rose to $3,8 billion from $833 million in the interim to March 2002.


Basic earnings per share increased to $12,43 from $3,43 in 2002.


The company declared a dividend of $2,50 per share compared to 71 cents in the comparative period last year.


Zirobwa said the group would concentrate on stock build-up with a current level of $5,7 billion, which was equivalent to one month’s production in some product lines.


An analyst said Art, which enjoyed a monopoly in the news print business in the country, had the muscle to influence prices without affecting demand. To reduce the impact of inflation, cash is now demanded up front meaning that the group was greatly reducing the risk of defaults in payment.


The analyst said although Art’s results were within the range of market expectations, the company could have performed much better.


He said: “Cost of production per tonne is declining. The company buys-in reject yield from those companies that use timber for roofing at a very low cost. This does not only decrease costs but also improves capacity. Hence Art should have done a lot better considering the company exports 73% from the Mutare Board machine and 21% newsprint and can satisfy its import needs with its own foreign currency.”

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