Firm exports bolster Art earnings

Shakeman Mugari

ART Corporation Ltd this week recorded earnings on the top-end of market expectations, spurred by firm increase in export volumes.



ca, sans-serif”>Overall volumes growth also helped the group achieve real growth in hard currency terms to hedge against inflation.


Export contribution to the group turnover increased to 43%, up from 24% achieved during the same period last year.


This contributed to an average United States dollar growth rate of 453% on the back of exports that have increased more than 1 000% during the last three years.


For the period under review, volumes in fine paper increased 12%, board volumes gained 50% while paper-based stationery firmed to 21% over the same period last year.


Writing instrument volumes increased 13%.


Volumes however slipped in newsprint, dropping 4% and tissue manufacturing which slowed to 12%.


Tissue converting dropped 15% while batteries also went down 5%.

Chief executive Richard Zirobwa told an analysts’ briefing this week that most of the volumes drop in the local market had been used to feed the export market which has been growing.


“Where we went down in Zimbabwe we covered in our exports market. The first half suffered a strain due to the price controls,” Zirobwa said. “The second half we achieved tremendous growth and it accounted for the bulk of our earnings because of the flexibility in pricing.”


Overall volumes were however up.

Gross profit margins improved to 45%, up from 42% in the comparative period last year.


Operating margins also increased to 39% from 26% in the same period last year.


The company said the debtors’ book was stable.


“Most of our local debtors are paying within 15 days and even some cash. The export clients are given one and three months,” said Zirobwa.

A final dividend of $16 per share was declared.


Zirobwa said the company had opened a waste paper collection operation in Zambia which management expects to add a further 220 tonnes of waste paper.


Zirobwa said the company was re-focusing market base in the international base and the progress has been made in consolidating the local market.

“We had a regional thrust to go into the other countries around Zimbabwe currently we are only taking out products there and with time we might establish soon base in those countries,” said Zirobwa.


On the cards for the expansion is Kenya, Zambia and South African markets.


“We are happy with down south but progress too has been made in Kenya and other countries.”


Asked on the speculation that the group was weaning off the battery manufacturing division – Chloride, Zirobwa was cautious.


“We did receive some offers for the division but as the situation stands, it still remains part of the group. We would only enter into a transaction that delivers value to the shareholders of the company,” said the chief executive officer.


The chief executive told analysts that the company would continue to look at any offer for any dividion of Art Corporation provided it will benefit shareholders of the company.


“When that is done for Chloride we will inform the shareholders and market.”


Art was demerged from TZI as part of the horticulture group’s strategy to enhance shareholder value.


Since then the company shares have gained on the market. TZI has also demerged strategies.


Art shares yesterday traded at $275.