RYAN CHIGOCHE
Zimbabwe Stock Exchange listed diversified conglomerate, Amalgamated Regional Trading (ART), is set to restructure and retool its paper business to boost output following the recent acquisition of Nampak’s 50% stake in Softex in a deal worth US$800 000.
ART and Nampak jointly owned Softex. But, ART acquired Nampak stake in May this year, to wholly-own Softex, one of the country’s leading tissue and femcare products manufacturer.
“The group is now focused on streamlining and capitalising the paper business silo. The group has prioritised the retooling of the paper chain with the prevailing global and regional overcapacity in the industry creating a window of opportunity to replace antiquated equipment,” group CEO Milton Macheka said in a trading update for the quarter to June 30,2021.
Volumes for ART Corporation soared 52% in the quarter to June 30,2021 against the prior comparative period. ART operates a paper mill, waste collection company, stationary and battery units, among other products and has presence in Zambia, Malawi and South Africa.
Revenue grew by 39% year to date albeit operating in a trading environment in the third quarter characterised by Covid-19-19 induced restrictions instituted in response to the third wave of the coronavirus.
The group export earnings were marginally ahead of the prior year with paper export volumes into the region showing signs of recovery.
Year to date sales volumes were 15% ahead of the prior year.
Macheka said performance in the batteries division remained resilient in the period under review while other business units were severely impacted by the Covid-19 pandemic.
The pressure on margins, however, persisted during the period necessitated an increased focus on cost containment and efficiency improvements.
In divisional performance, the batteries segment realised a 37% volume growth for in the 3rd quarter to June 30, 2021 owing to the batteries business segment which continued to realise the benefits of its capitalisation programme as well as improved product availability across most product lines.
The export volumes were maintained at prior-year levels.
The paper segment, Kadoma Paper Mills, National Waste Collections and Softex registered a moderate volume increase of 11% compared to the prior year.
However, the delay in payments from the foreign currency auction coupled with logistical and raw material supply constraints necessitated commercial downtime with major repercussions on operating efficiencies, fixed cost absorption, and profitability.
Timber volumes increased by 27% as demand remained firm.
Eversharp volumes for the quarter recovered by 255% compared to the prior year which had limited trading because of the hard lockdown.
Macheka added that the business continues to breakeven with improved volumes across the market despite the continued uncertainty of the school calendar.
On the outlook, Macheka said the company remains positive that they will maintain the strong Q3 results despite the unpredictable and changing environment they will be operating in.
“The group remains cautiously optimistic that it will sustain its resilient performance despite the uncertainty in the environment,” Macheka said.
