LISTED stationary, paper and batteries manufacturer, Amalgamated Regional Trading (ART) Corporation overall volumes for the year to September 30, surged by 8 percent compared to prior year despite the negative effect of limited power supply and Covid-19 disruptions.
The Zimbabwe Stock Exchange (ZSE) listed entity said in its financial statements for the year ended September 30, 2020 that performance was affected by inconsistent power supply as well as coronavirus related trade and supply disruptions in the second half of the year.
The batteries segment continued to drive the group’s performance with volumes increasing by 17 percent for the year while exports from this division grew by 13 percent in the period under review.
Paper mill volumes increased marginally towards year end on the back of better power supply situation and raw material supply, but demand remained largely subdued, as volumes retreated 37 percent.
Softex tissue volumes declined by 20 percent from prior year due to reduced disposable incomes and inconsistent supply of recycled bulk tissue. Contribution of non-tissue lines rose to 18 percent of total sales.
Eversharp pen volumes were 33 percent lower than prior year as schools remained closed during the period due to Covid-19 while production resumed towards the end of the year in preparation for schools reopening.
Timber sales volumes for the year increased by 37 percent as a result of improved milling efficiencies and firm demand. Operations at the estates were largely unaffected with no major fire incidents.
Chairman Mr Thomas Wushe said despite the challenges encountered by the group export volumes grew ahead of prior year by 3 percentage points while also riding over pricing challenges from instability in regional currencies.
“The group posted revenues of $2,601 billion representing an increase of 28 percent on prior year due to the increased volumes and inflation induced price adjustments,” he said.
Gross margins were held at 52 percent, as prices were increased in line with movements in costs of raw materials and labour. Operating expenditure increased by 18 percent on prior year.
Operating profit increased to $824 million, representing growth of 32 percent for the year.
The group recorded fair value losses on biological assets and investment property of $218 million and $173 million respectively owing to reductions in real market values during the period.
Mr Wushe said capital expenditure was limited to critical maintenance projects amounting to $295 million. He however said funding of key raw materials remains a priority given constrained cash flows.
Looking ahead, Mr Wushe said the group remained resilient to sustain production despite challenges in the operating environment. He said measures to stabilise the exchange rate and improve availability of forex will improve and enable the business with plans to seek new opportunities.
“Cost control measures have been taken to mitigate the effects of constrained trading while closer relations are being maintained with financial partners who have availed appropriate funding to support working capital requirements,” Mr Wushe said.