US$4m offshore debt burden for ART Corporation

ART Corporation says it is saddled with an offshore creditors’ debt of over US$4 million and a monthly requirement of US$600 000, but the company is optimistic the new interbank forex trading system could help ease the burden.

A number of firms have been struggling to access foreign currency to service their foreign currency obligations, as well as access fresh lines of credit due to the prevailing economic situation.

However, Art chief executive Milton Macheka told businessdigest on the sidelines of the company’s annual general meeting that if there is efficiency in the interbank floating forex management the system, normalcy could return to the sector.

He said the company, which is looking at growing its exports by 30%, will be able to meet its monthly foreign currency requirements.

“In light of the monetary policy, if there is efficiency in the systems, it could bring back some normalcy. We have applied through the banks but we have not received anything yet. We are looking at our requirements going forward. Legacy ones are supposed to be registered and ring-fenced for speculation,” he said.

We owe our creditors in excess of US$4 million for the facilities and materials that we used. We are being more aggressive in terms of what we are doing and we believe that we are in a better place, our plan is to roll exports volumes to 30%.”

The group’s turnover in the five months to February grew to US$23 million from US$18 million in the prior year, while local sales volumes were down 20% except for the paper mills in Kadoma which are maintaining 2018 volumes. 

Export revenues increased by 10% in line with increased focus on export growth. Gross margins were at 41% against prior year’s 45%.

The major challenges during the period was depressed demand and the unavailability of foreign currency for critical inputs, the company said.

Meanwhile, Macheka said the company lost approximately 20% of its full month’s revenue during the January political disturbance.

“We had a week where we had no business at all across the business for the month straight. We had no business at all in January so in terms of revenue loss we would easily have been affected by 20%. The uncertainty itself had also had an a impact on our monthly revenues of about US$4 million,” he said. — Staff Writer.