Severe headwinds choke ART

BUSINESS REPORTER

Amalgamated Regional Trading (ART), a listed diversified group, is choking under a heap of extreme economic headwinds ravaging the Zimbabwe economy, forcing it to scale down the paper business as well as restructuring the group, Business Times can report.

ART operates a paper mill, a waste collection company, stationery and batteries units, among other products and has presence in Zambia, Malawi and South Africa.

The latest development was confirmed by ART CEO, Milton Macheka.

He said   the business is currently undergoing restructuring, with an emphasis on de-leveraging, reducing currency risk and improving cash generation. The group, he said, has so far successfully disposed of some of its underutilized properties and applied the proceeds towards reducing debt.

“The operating environment continued to be plagued by a variety of challenges among them foreign currency instability, inflation, and unreliable power supply,” Macheka said.

Consequently, Macheka said the group’s overall volumes for the  quarter to June 30, 2024 declined by 8% mostly due to the scaling down of the paper business while export volumes for the quarter declined by 28% with regional sales performance impacted by foreign currency challenges.

ART products   faced  increased pressure on pricing from imports as the market adjusted to the currency reforms and the reduced liquidity in the market.

“The demand for maintenance free and larger batteries grew as the market responded to our wider sales support and quality compared to the prevalent sub-standard imports,” Macheka said.

However, volumes increased by 5% to 93 523 units on the back of improved product availability and reduced currency fluctuations.

Revenue for the period ended June 2024 was US$24.9m.

Macheka said stationery and paper  business was affected by the delays in completing currency conversion processes across the market.

Pen volumes at 10.2m declined by 26% from prior year.

He said timber sales volumes increased by 21% to 1, 614m driven by increased demand for structural timber and margins remained firm despite competition from contractors with toll milling arrangements.

Customised pallet production resumed during the period.

ART expects the economic environment to remain difficult with inflation, currency instability and erratic power supplies to continue weighing down growth opportunities.

Macheka said the group will continue to take the tough decisions necessary to protect the business and its sustainability beyond the current situation.