ART Holdings business units remain profitable
STATIONERY manufacturer, ART Holdings Limited (AHL) says all its business units remained profitable during the third quarter ended June 30, 2020 despite reduced volumes and increased inflationary pressure on costs.
In a statement released last Thursday, AHL company secretary Abisai Chingwecha said the operating environment during the reporting period was significantly negatively affected by the COVID-19 pandemic as infections worsened across the globe and in the region.
“Group revenues for the quarter grew by 132% in inflation-adjusted terms and 831% in historical terms as the escalation of costs necessitated significant price adjustments. All business units remained profitable during the quarter despite reduced volumes and increased inflationary pressure on costs,” Chingwecha said.
“The business continued to focus on exports in the region, with the battery exports increasing by 22% during the period on the back of improved product availability. Kadoma tissue exports declined by 38 % as movements in the domestic currency adversely affected competitiveness.”
He said: “The group successfully eliminated its foreign currency exposure during the period and the board will maintain its thrust to increase foreign currency generation given the prevailing shortages in order to sustain operations”.
AHL manufactures and distributes products in three key categories, paper products, stationery and batteries.
During the reporting period under review, the group’s overall volumes for the quarter declined by 17% compared to the same period last year mainly due to trading restrictions during the lockdown period.
Under the period, export earnings for the quarter decreased by 8% compared to the prior year. Year to date overall volumes for the nine months ended June 30, 2020 decreased by 3%.
“The batteries business segment managed to meet export orders and improve product availability in the local market. Sales volumes recovered from a 44 % reduction in April to an overall decline of 6% for the quarter compared to prior year. The Exide Battery delivery service was enhanced in Harare and extended to Bulawayo to improve customer convenience,” Chingwecha said.
“The paper business continued to rely on imported paper as local collection volumes slumped in line with reduced economic activity. Power supply improved during the period and new lines aimed at increasing the usage of available local waste grades were introduced. Volumes declined by 40% compared to the same period last year as logistical challenges on imported raw material impacted operations.”
He said the Softex tissue volumes declined by 14% as a result of the inconsistent supply of raw materials from the mill and foreign currency challenges.
“The contribution of hygiene volumes increased to 7% compared to 3% last year as the company’s diversification strategy continues to show promise,” Chingwecha said.
“Eversharp pen volumes were 71% lower than prior year as business was affected by the lockdown and uncertainty around the school calendar. The division managed to break even during the quarter due to improved process and cost efficiencies.”
The stationery manufacturer reported that its timber sales volumes for the quarter declined by 57% due to trade restrictions during the lockdown period, consequently cumulative volumes for the year decreased by 27% compared to the same period last year.
Operations at AHL’s estates remained unaffected and sales improved when the lockdown restrictions were eased.
In an outlook for the group, Chingwecha said AHL had managed to sustain production and trading in both the local and regional markets despite the challenges in the environment.
“Opportunities to supply new lines in market segments affected by reduced imports will continue to be taken to build on the resilience of the business units,” he said.
“The measures taken to stabilise the exchange rate and improve foreign currency availability will improve raw materials imports and local trading conditions.”