Zimbabwe Stock Exchange-listed diversified company, Amalgamated Regional Trading (Art Holdings) will consider continual exploration of regional markets as the company earned a fortune from exports in the 2020 first quarter trading period and particularly the three months to December 31, 2019.
The company manufactures and distributes papers, ballpoint pens, lead acid batteries and sanitary products. It also provides forestry resources management services. Products are distributed locally and across Southern Africa. Main business segments include the battery segment, paper segment, Eversharp, Softex and plantations.
A number of challenges had threatened business operations in the first quarter but the company had been resilient and proactive to some of the challenges especially through usage of alternative power sources to withstand electricity challenges. Some of challenges included foreign currency shortages and high inflation.
Said company secretary Abisai Chigwecha in a statement accompanying the first quarter trading update;
“The group managed to establish stable foreign currency streams from exports and except for the Paper Mill was able to use alternative power sources to minimise the impact of the erratic power supplies.”
Focus on expansion into regional markets hence stem from the desire to boost forex sources while anchoring business segments falling prey to obtaining headwinds.
“The group will continue to seek growth opportunities in the region while consolidating its resilient and dominant business segments in the local market in order to minimise the impact of the macro environmental challenges,” added Chigwecha.
Despite the challenges that characterised the first quarter trading period, ART posted a commendable financial performance aided by segments’ resilience.
Taking cognisance of inflation adjusted figures, battery revenue increased by 91 percent to $156,5 million for the first quarter 2020 compared to $81,7 million in the same period prior year. Revenue performance reflect a 28 percent increase in volumes “on the back of improved product availability as well as strong demand for solar and industrial standby batteries”.
Demand for solar batteries possibly increased with the widespread urge to go green and the desire to find an alternative in the face of electricity shortages. Companies are on a spree to adopt solar power to ensure production continuity in cases of load-shedding.
The Eversharp segment recorded a 27 percent (inflation adjusted) increase in revenue to $23, 1 million compared to $18,2 million in the first quarter of 2019. This was reflective of a 15 percent volume increase on the back of “improved product availability and a successful marketing campaign at the onset of the back to school period.”
For the plantations segment, revenue grew by 93 percent (inflation adjusted) to $6,8 million for the 2020 first quarter from $3,5 million in 2019 comparative trading period, attributable to enhanced timber production and timber trading.
Softex’s revenue soared by 31 percent (inflation adjusted) to $32,6 million for the period under review from $24,8 million in the 2019 first quarter. However, volumes fell by 23 percent “due to delays in receiving raw material”.
The paper segment performed dismally as revenues plummeted by 6 percent (inflation adjusted) to $15,3 million down from $16,2 million in the preceding comparative period. Volumes for the segment also fell by 46 percent owing to “increased load shedding” that made it difficult to meet orders. Further, the Mill plant availability had reportedly fallen to 35 percent in December 2019.