ART Corporation says it will continue to seek growth opportunities in the region while consolidating its dominant business segments in the local market in order to minimise the impact of the macro environmental challenges.
This comes on the back of an ever toughening operating environment, which is showing no signs of improvement in the short term.Continuing shortages of foreign currency and persisting liquidity constraints affected the group’s trading, resulting in overall volumes reducing by 18% on average across the business units for the FY 2019.
Revenue increased to ZW$267 million due to price increases effected in response to increased production costs in the full year 2019.ART board chairperson Thompson Wushe said the economic challenges are expected to continue in the short term as inflation and foreign currency volatility will slow down trading.
“The group will continue to defend its, market share whilst exploiting new export markets and opportunities in the hygiene, solar and industrial battery segments,” he said.
“Operational efficiencies will be enhanced to ensure that costs are contained and our customers continue to receive quality products and superior service.”
The group’s foreign currency exposure reduced significantly to US$2 million as of September 30 2019 from US$4 million while net borrowings at ZW$24 million were constrained as increased cash sales and concerted collection efforts on receivables enabled the group to minimise pressure on cash resources.
On a quarter-to-quarter basis, ART’s revenues, however, declined by 6% in inflation adjusted terms and increased by 380% in historical terms reflecting the replacement cost price increases effected during the quarter.
Volumes dropped by 46% as orders could not be met following increased load-shedding.In December, the Mill plant availability fell to 35% due to the macro-environmental challenges.
Battery revenue increased by 91% (inflation adjusted) and 961% (historical)reflecting a 28% increase in volumes on the back of improved product availability as well as strong demand for solar and industrial standby batteries
Revenue for the quarter increased by 83% in inflation adjusted terms and 859% (historical) as overall volumes grew by 9% compared to the same period last year.
The group company secretary, Abisai Chingwecha, said in a trading update that: “The trading environment for the first quarter ended December 31 2019 was characterised by high inflation, foreign currency and power shortages as macroeconomic fundamentals continue to deteriorate.
“The group managed to establish stable foreign currency streams from exports, except for the Paper Mill, which was able to use alternative power sources to minimise the impact of the erratic power supplies.”
Softex revenues increased by 31% (inflation adjusted) and by 596% (historical) while Volumes fell by 23% due to delays in receiving raw material.
On the other hand, Eversharp revenue grew by 27% (inflation adjusted) and 580% (historical) from prior year reflecting a 15% volume increase. The sales were driven by the improved product availability and a successful marketing campaign at the onset of the back to school period.