Siphakeme .Mnindwa
Sikhulekelani Moyo, mskhulekelani16@gmail.com
ZIMBABWE Stock Exchange (ZSE)-listed manufacturing giant Amalgamated Regional Trading (ART) Holdings has highlighted significant challenges facing its paper milling division, including raw material shortages and inconsistent power supply.
In a statement accompanying the company’s financial results for the year ending September 30, 2024, ART chairperson Dr Thomas Utete Wushe said production was scaled back during the year to optimise newly installed equipment and restructure operations.
However, this process had to be extended to the end of the year due to worsening market conditions and power supply issues, which are expected to persist into 2025.
“The paper milling sector continues to grapple with substantial obstacles, including raw material supply constraints, the cost and availability of power and water, and technological disruptions in the industry,” said Dr Wushe.
Despite these challenges, he expressed confidence in the company’s ability to adapt and overcome.
“The group remains optimistic that its experience and ongoing investments will enable it to weather these difficulties and achieve long-term growth,” said Dr Wushe.
ART Holdings recorded an 11 percent decline in revenue for 2024 compared to the previous year, primarily due to product availability challenges and the deliberate scaling down of paper production.
Export volumes also fell by 15 percent, exacerbated by foreign currency shortages in the region, which caused significant payment delays in Zambia and Malawi.
However, gross profit margins improved to 44 percent, up by two percentage points, driven by a shift in the sales mix as low-margin paper production slowed. On the downside, operating expenses rose due to currency fluctuations, prompting service providers to demand payment in hard currency to hedge against further value loss.
The group reported an operating profit of US$1 million but posted a pre-tax loss of US$1,5 million, partly due to once-off retrenchment costs of US$675 000. Short-term bank debt was significantly reduced using proceeds from property disposals, while finance costs decreased by six percent from the prior year.
The batteries division experienced an 8 percent decline in volumes due to tough economic conditions, power supply disruptions, and supply chain challenges. Nevertheless, demand in the market remained robust despite increased competition from imports.
Dr Wushe noted the division’s efforts to stay ahead of technological trends, including the launch of maintenance-free batteries and the expansion of battery clinics nationwide. These clinics aim to educate consumers on avoiding counterfeit and low-cost imported batteries, which often lack after-market support.
The industrial battery segment performed well, with volumes increasing by 16 percent, driven by strong demand from the mining, energy, and telecommunications sectors.
The stationery division faced headwinds from power-induced product shortages, disruptions in the formal market, and currency instability, resulting in a 10 percent drop in volumes compared to the prior year.
Dr Wushe said the proliferation of low-cost imported pens during the back-to-school period, compounded the division’s challenges. However, the launch of the new Eversharp pens was a bright spot, contributing 10 percent of total revenue in their first year.
Despite the hurdles, ART Holdings remains steadfast in its mission to strengthen and reposition its business. –@SikhulekelaniM1
