Art revenue up 8pct in four months, but forecasts H1 loss

Art revenue up 8pct in four months, but forecasts H1 loss

HARARE, February 27 (The Source)  Amalgamated Regional Trading (Art) Corporation has reported an eight percent increase in revenue to $11,4 million in the four months to January and projects full-year turnover of $31 million on improved capacity utilisation and higher volumes.

In a trading update at the firm’s annual general meeting on Friday, Art chief executive Tapiwa Ameer, however, said the company expects to report a first half loss although an improved performance is expected in the second half.

Art said it had recorded a marginal improvement in its gross profit margin, 30 percent compared to 29 percent in the prior year.

The average capacity utilisation for its six subsidiaries was higher at 72 percent compared to 56 percent in the prior year, the company said.

Sales volumes for the tissue manufacturing business, Softex and battery making for Zimbabwe were both up by 12 percent while the Zambian subsidiary’s battery business remained static.

Pen maker Eversharp’s sales volumes were three percent lower due to working capital challenges in the market.

“We have just finished phase one of the capital expenditure replacement programme worth $1,9 million. We have commissioned machines in Chloride factory, Eversharp factory and Kadoma and all the machines are running well,” said Ameer.

“We expect the benefits coming out of this capitalisation to come through in the second half. These machines will improve quality of products, reduce cost of production and increase the product range.”

The company’s debt rose by 14 percent to $9,3 million from $8,1 million in September 2014 as it borrowed to fund capital expenditure.

Ameer said Art is working on restructuring its debt from a short-term to a long term.

“We are also looking inward in our business going forward in terms of reducing cost in doing business but the bigger issue depends on our balance sheet.”