ART to pour US$20m into paper mill

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ART Corporation (ART) says it will invest in excess of US$20 million in the retooling of its Kadoma Paper Mill plant and its tissue manufacturing division in FY18.

By Melody Chikono

The retooling exercise, which started last year, saw Chloride Zimbabwe getting a US$3 million injection in new technology for manufacturing lead acid batteries.

The recapitalisation exercise is expected to be an ongoing as the group eyes export markets and targeting a 30% increase from current levels of between 18 to 20% while revenues are seen reaching US$39 million in 2018.

Art group CE Milton Macheka told businessdigest on the sidelines of an analysts briefing on Monday in the capital that investment would flow into Softex as well.

“Roughly the investment into Kadoma is going to entail a downstream investment into Softex. What we are doing is we will be bringing a different range of equipment so the converting has to be synchronised with production. The total investment we are looking at is between US$15 and US$20 million,” he said.

Macheka said the bigger picture for 2018 was the Kadoma retooling, which he admitted was critical given that the company was making use of antiquated machinery.

The group will also relook into lead processing and reduce lead calcium importation.

In 2017, revenue at the Kadoma plant increased 22,4 % to US$5,5 million from US$4,5 million in the same period prior year on the back of increased production in the company aided by capitalisation of the plant and other initiatives while operating profit increased to US$229 million from US$227 million same period last year.

However, the business was also affected by cash shortages, but Macheka said the margins which increased to 20% from 8% the previous year remain meaningful.

Capacity utilisation increased to 85% from 76% in the prior year. ART is also looking at acquiring a book making machine for its subsidiary — Eversharp — in the first quarter of 2018 as the group eyes the export market on the back of the strong brand.

“We are expecting a strong export drive as it’s already a strong brand and in the first quarter of 2018 we are expecting installation of a book making machine,” he said.

Groups revenue for October-November 2017 was US$6,07 million while profit before tax stood at US$1,47 million.

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