ART Corporation Ltd (Art) has warned shareholders that its next half-year profits are likely to be lower than last year owing to the sudden change in market conditions.
In a cautionary statement to the market last week, Art warned that its profits had come under severe pressure from high interest rates and energy costs.
The group said viability had been seriously affected by the existing blend rate on exports.
“The group’s profitability remains seriously threatened by the new and the existing blend rate on exports,” said group company secretary Franklin Mukarakate in a statement.
Volumes and margins at the stationery-maker have also been depressed in December and January owing to low demand.
This setback came hard on the heels of what the company called a satisfactory business in the months of October and November.
“The firming of the Zimbabwe dollar in December resulted in stock on hand being expensive relative to replacement costs. Stock write-downs to reflect significantly the lower replacement costs were booked in order to assist in the moving,” said Mukarakate.