ART Holdings Ltd posted a near 29% fall in profit after tax to $541,83 million for the half year to September 30, 2020 owing to power supply disruptions and COVID-19-related trade and supply disruptions.
BY TATIRA ZWINOIRA
This was down from a profit after tax of $761,37 million in the comparative 2019 half year period.
In a statement, ART chairman Thomas Utete Wushe said the group traded under difficult and challenging economic conditions during the year under review.
“The group’s overall volumes for the year increased by 8% compared to prior year. Performance across the business units was affected by inconsistent power supply in the first half of the year and COVID-19-related trade and supply disruptions in the second half of the year. Export volumes were 3 percentage points ahead of last year despite pricing challenges emanating from instability of the regional currencies,” he said.
“The group posted revenue of $2,601 billion representing an increase of 28% on prior year due to increased volumes and inflation-induced price adjustments. Gross margins were held at 52% as prices were increased in line with movements in costs of raw materials and labour.”
He said operational expenditure increased by 18% compared to the prior year but that the group recorded fair value losses due to currency volatility.
“The group recorded significant fair value losses on biological assets and investment property of $218 million and $173 million, respectively owing to reductions in real market values during the period,” Wushe said.
This contributed to a decline in total assets to $3,25 billion in the period under review from $4,75 billion in 2019 .
In a segment breakdown for the group, ART’s batteries business segment continued to drive the group’s performance with battery volumes increasing by 17% for the year.
Wushe said export volumes increased by 13% for the year as the division managed to grow its presence in the region.
“The paper mill production volumes improved marginally towards year end on the back of improved power and raw materials, however, demand remained weak and volumes fell by 37% compared to the same period last year,” he said, commenting on the other segment’s performance.
“Softex tissue volumes declined by 20% from prior year because of reduced disposable incomes and inconsistent supply of cheaper recycled bulk tissue. The contribution of non-tissue lines increased to 18% of total sales as the product range was widened.
“Eversharp pen volumes were 33% lower than prior year as schools remained closed during the period. Production was resumed towards the end of the period in preparation for the re-opening of schools.”
He said timber sales volumes for the year increased by 37% as a result of improved milling efficiencies and firm demand while operations at the estates remained largely unaffected.
Of concern for the group was capital expenditure which was limited to critical maintenance projects amounting to $295 million because of constrained cashflows.
Wushe said ART only had “sufficient” cash to support operations and currently had adequate key raw material facilities to trade sustainably in the year ahead.
In terms of liquidity, ART had a current ratio of 1,18 showing the company had more than enough to cover its liabilities should they become due.