eBusiness Weekly
Enacy Mapakame
Paper and packaging group, Amalgamated Regional Trading (ART) Holdings Limited’s after tax profit for the half year to March 31, 2019 surged 135 percent to $8,6 million from $3,6 million achieved in the same period the prior year on increased exports.
Operating profit increased 44 percent to $6,2 million from $4,3 million. ART indicated an exchange loss of $1,2 million was recorded in March this year, after the RTGS dollar depreciated by 20 percent in its first month of trading on the interbank market.
In February, the Reserve Bank of Zimbabwe (RBZ) announced the introduction of the RTGS dollar, as the country’s currency of accounting, as well as the interbank foreign currency market.
Revenue for the period under review jumped 34 percent to $29 million while local sale volumes went down, as inflationary pressures eroded disposable incomes.
But export sales volumes went up by 30 percent driven by increased focus on foreign currency generation initiatives.
ART said gross margins improved by 2 percentage points on prior year comparable period to 45 percent, but increasing cost of raw materials is expected put pressure on margins going forward.
The group said capacity utilization declined to 69 percent from 76 percent in the same period last year. Inflationary pressures and foreign currency challenges have posed a serious threat to local industry with companies failing to procure necessary raw materials resulting in reduced production and in instances, product supply gaps.
On divisional operations, all business units remained profitable during the period under review.
The batteries revenues on the local market went up 37 percent although volumes declined by 14 percent due to the restrained trading during the three months to January 2019.
ART said volumes for Chloride Zambia increased by 30 percent on aggressive selling efforts.
Its revenue from Softex Tissues increased 85 percent to $8,7 million although volumes were affected by foreign currency shortages to import raw materials — virgin tissue.
Hygiene and femcare volumes grew by 17 percent and 10 percent respectively on increased product availability.
Kadoma Paper Mills and Waste Collections recorded revenue growth of 69 percent to $6,7 million. But volumes at the mill were 4 percent below the prior year comparative period due to erratic power supplies.
Export volumes for the division rose 15 percent while operating profit increased to $1,5 million on enhanced machine efficiencies.
At Eversharp, volumes went down 33 percent although revenue increased 51 percent to $5,3 million. The unit was badly affected by the disruption to the disruption to the back to school period. Resultantly, its operating profit went down to $0,1 million from $0,9 million.
Timber demand remained firm during the period which drove a 147 percent increase in operating profit.
Management at Art remains upbeat about improved performance on the back of enhanced efficiencies following retooling of its business.
The group also pins its hope on increased exports which should help in its foreign currency generation initiatives.
