ZIMBABWE’S operational environment is projected to remain challenging, but Amalgamated Regional Trading Holdings (ART) says it will weather the storm thanks to its retooling programme.
In a trading update for the third quarter to June 2023, ART group company secretary Abisai Chingwecha said the business was facing economic headwinds which included exchange rate volatility and inflationary pressures which affected trading across the group’s divisions in the period under review.
“The operating environment is expected to remain challenging, however, the group’s resilience has been bolstered by its retooling programme despite the economic headwinds,” Chingwecha said.
ART revealed recently that it has retooled Eversharp, a leading manufacturer of ballpoint pens, rulers and markers in the country, to increase its production capacity.
“The business will leverage on its global sourcing partners to deliver cost competitive raw materials. The increased capacity and new equipment will enable us to deliver a wider range of quality products to our customers.
“The group’s cashflow position remains constrained, however, management is confident that on-going restructuring initiatives will enable it to strengthen its balance sheet and achieve financial flexibility given the prevailing turbulent economic conditions,” he indicated.
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Revenue for the period grew by 54% to ZWL$75,2 billion in inflation-adjusted terms compared to the prior year.
Overall volumes declined by 2% during the quarter. Export volumes recovered, registering a 16% increase from the prior year in line with improved product availability.
“The group remains profitable, however, margins have come under pressure due to increased input costs and the impact of the punitive foreign currency retention policy on exports,” Chingwecha said.
Battery volumes declined by 9% from the prior year volume of 90 445 units due to the power-induced downtime at the beginning of the quarter.
He said production efficiencies following the commissioning of new grid casters increased output in June and July which boosted the “Powered by Exide” winter promotion.
The project to increase automotive battery manufacturing capacity is nearing completion and will enable improved stockholding across all product ranges.
The division commissioned an additional 200KVA generator and is working closely with the power utility to upgrade power at the Workington factory.
Paper volumes decreased by 5% from the prior year volume of 2 290 tonnes as trading was affected by exchange rate volatility and price distortions, particularly in the formal retail sector. Demand for bulk tissue on the export market remained firm.
Chingwecha said competition from imports increased on the informal market with pricing and access to foreign currency being key in creating competitive advantage.
A new tissue mill will be supported by the streamlining and restructuring of the paper divisions in order to drive performance along the value chain, he further indicated.
“A new converting line will be commissioned before the end of the financial year with resultant cost savings, quality improvement and increased tissue output,” he added.
At Eversharp, volumes increased during the quarter by 28% to 12 430 000 pens on the back of increased production output following retooling and improved power supply.
Exports to Zambia resumed, and stationery trading was buoyed by the launch of the Eversharp Mate and Eversharp Pen Pal brands in response to market demand, the company said.
Timber volumes at 2 350 cubic metres increased by 7% from prior year. Chingwecha said the order book for both structural timber and pallets remained firm as customers in the sector preferred to trade in foreign currency.