adminWalter Muchinguri Harare Bureau
Diversified group, ART Corporation recorded a $1,16 million loss in the half year period ended March 31, 2014 from a profit of $236,000 a year earlier after its business units achieved lower volumes due to liquidity challenges in the economy. As a result the group’s margins fell to 31 percent from 34 percent a year earlier while revenue was 7,5 percent lower at $14,09 million. Only the stationery unit achieved positive volumes.
“The persistent liquidity constraints in the economy as well as competition from imports significantly constrained the business’ ability to generate revenues to planned levels,” the group’s chairman Passmore Matupire, said.
In terms of performance the battery unit’s revenue fell by 6,5 percent due to lower volumes on the local market and Zambia.
Market volume was down 9,6 percent while factory volume came in lower at 14,7 percent.
“In the Zimbabwe retail business, volumes were affected by reduced purchasing power of customers as well as competition from South Africa and Botswana which impacted on the margins.
“The Zambian market suffered from the decline in copper prices and the devaluation of the Zambian kwacha during this period,” Matupire said.
The stationery unit on the other hand recorded an 18 percent and 15 percent increase in volumes and revenue respectively on the back of strong demand for Eversharp pens during the back to school period.
The unit’s margins subsequently rose to 36 percent from 30 percent a year earlier as a result of improved capacity utlisation and cash flow.
In the paper division revenue fell by 25 percent as capacity utilisation declined to 72 percent from 82 percent despite an improved performance in Softex which recorded a 2 percent increase in margins to 22 percent and a reduction in operating expenses to 10 percent.
However, the devaluation of the rand which favoured cheaper imports from South Africa affected revenues of the unit which were down 30 percent.
Revenue from plantations also came in lower at 37 percent due to weak demand and lower prices although the situation has since improved during the second half of the year.
Looking ahead Matupire said it expects to commission $1,8 million worth of equipment, which is meant to improve efficiencies and increasing capacity by year end.
The equipment is aimed at ramping up production at Eversharp, the Kadoma and Battery factories.
“In addition to the capital expenditure facility, it is expected that the business will utilise $2 million of shareholder working capital funding which will reduce the current working capital constraints faced by the business,” he said.
derick.khumalo