Online Reporter
Tapiwanashe Mangwiro
ART Holdings Limited has reported a 4 percent revenue dip to US$7 million in the first quarter of its 2026 financial year, after constrained liquidity, high borrowing costs and working capital pressures weighed on performance, despite the stable macroeconomic environment.
In a trading update for the first quarter ended December 31, 2025, the diversified manufacturer said the period was deliberately shaped by a renewed focus on margin improvement and cash generation, following a value protection decision to scale down the paper business.
The operating environment was marked by consistent monetary policy measures that offered businesses time to adjust strategically. However, access to funding remained limited and borrowing costs stayed elevated.
Although power availability improved during the quarter, production across some units was still disrupted by working capital gaps, affecting the group’s ability to meet demand consistently.
Overall sales volumes were 1 percent below the comparative period of the prior year. Market demand showed firmer signs in selected product lines, particularly Exide batteries and Eversharp pens.
The cumulative effect of production interruptions and logistical delays, largely linked to constrained working capital, dampened volumes during the quarter.
Export volumes declined by 2 percent year-on-year as the group continued to selectively tighten credit terms in regional markets, a move aimed at protecting cash flows and reducing credit risk in an environment of heightened uncertainty.
The energy cluster delivered one of the more positive performances in the quarter. Local battery volumes were marginally ahead of the prior year, supported by adjustments in sales channels and intensified marketing efforts that are beginning to yield results.
A favourable product mix and ongoing cost containment initiatives drove gross margin improvements in the battery business.
Management said the Exide brand continues to enjoy strong equity in the market, with efforts underway to address recurring product shortages that have previously constrained growth.
In the Stationery and Paper segment, pen volumes declined by 14 percent compared to the same prior year, while turnover fell by 12 percent. The decline was attributed to a combination of improved pricing discipline and deliberate stocking by traditional channel partners.
The group noted that significant back-to-school orders were supplied in January 2026, which fall outside the reporting quarter and are expected to support volumes in the second quarter.
Plans to resume tissue converting were deferred further to allow for more effective raw material planning. Management said working capital deployment priorities required preserving the option to recommence this activity in the second half of the financial year, once liquidity pressures ease.
At Mutare Estates, timber volumes rose by 40 percent compared to the comparative prior year as the business expanded its customer base. Despite the strong volume growth, margins came under pressure due to higher harvesting and milling costs, reflecting rising input and operational expenses.
ART Holdings said it continued to implement strategic interventions outlined in its 2025 full-year results. These include active engagement with creditors, settlement of restructuring obligations, strict cost controls and tight management of working capital.
Progress was also reported on planned property disposals, with proceeds expected in the second quarter at market-reflective prices, providing some relief to the Group’s liquidity position.
Chief executive officer Mr Milton Macheka said management remains focused on stabilising the business and rebuilding financial strength.
“The group’s recovery strategy will continue to prioritise margins, liquidity and operational resilience,” he said.
“We recognise stakeholder concern on the pace of recovery, given the difficulties the business has faced and are confident that ongoing initiatives with sufficient time will deliver consistent improved financial performance.”
He added that the business requires recapitalisation and is currently concentrating on internal funding sources.
“The business requires recapitalisation and is presently focused on internal funding through improved cash generation, working capital discipline and asset disposals,” said Mr Macheka, noting that future capital decisions will be guided by shareholder value considerations and prevailing economic conditions.
ART Holdings is positioning itself for a gradual recovery, anchored on disciplined execution, selective investment and a sustained emphasis on cash preservation in a challenging operating landscape.
