Zimbabwe Stock Exchange listed diversified manufacturer, Art Corporation spent close to ZWL$24m for back-up power and furnace efficiencies during the six months to March 31, 2020, board chairman Thomas Wushe has said.
The improved power supply during the period under review enabled the group to sustain the momentum in the batteries business while improved efficiencies following furnace upgrade increased capacity and created a strong platform to pursue untapped value opportunities in the industrial and solar sectors.
The group posted a revenue increase of 97% (inflation-adjusted) to ZWL$453m and 921% (historical) on the back of volume increases and
Export revenue for the period increased 23% in United States Dollar (USD) terms compared to the same period last year while gross profit margins during the period increased by two percentage points from prior year to 56% due to improved sawn timber volumes.
The group’s financial position improved during the period following
the significant reduction of the group’s foreign currency obligations.
The remaining legacy debt of US$459, 000 was transferred to the
Reserve Bank of Zimbabwe and has been recognised at the prevailing
interbank market rate.
Art Corporation’s net borrowings were contained at ZWL$38m while the net current asset position improved to ZWL$53.7m from a net current liability position of ZWL$57.7m at the end of September 2019.
Wushe noted that the group’s efforts to preserve value by timeously
adapting to the changes in the operating environment are reflected
in increased monetary gain of ZWL$69.5m during the period.
On volumes, the group’s overall volumes for the half year grew 10%
compared to prior year with growth being driven by automotive and
Pen sales volumes during the period increased 11% for the period compared to prior year.
Volumes were driven by aggressive selling effort during the back to
school period. Capacity utilisation increased by three percentage points
to 69% from prior year. Timber half year sales volumes increased 27%
compared to the same period last year while trading partnerships improved
product availability and range.
The Paper business segment during the period was affected by power
shortages and the erratic supply of raw materials while volumes for the
half year decreased by 33% compared to the same period last year.
“The group increased waste paper from Botswana and South Africa
during the period in order to sustain tissue production as local waste paper
volumes continued to decline,” Wushe said.
Softex tissue volumes decreased by 27% compared to the same period
last year while increased focus on the manufacturing of hygiene products
yielded positive results as sales volumes increased by 490%.
Tissue sales during the period were affected by the inconsistent supply of
raw material and the adverse impact of price escalations on the supply