By Taurai Mangudhla
ZIMBABWE Stock Exchange-listed Art Corporation (ART) is streamlining and capitalising its paper business after acquiring 50% shareholding in Softex from Nampack in May in a US$800 000 transaction.
“The acquisition of Nampak’s 50% shareholding in Softex was completed in May 2021 and all conditions precedent were met. The group is now focused on streamlining and capitalising the paper business silo,” ART said in a trading update for the quarter ended June 30, adding that priority is given to the retooling of the paper chain with the prevailing global and regional overcapacity in the industry creating a window of opportunity to replace antiquated equipment.
This is in line with the company’s future plans which are hinged on the underlying strength of its core paper business segments.
ART said the capital expenditure commitments taken will ensure recovery when fully implemented.
Going forward, the group said it remains cautiously optimistic that it will sustain its resilient performance despite the uncertainty in the environment.
“The gains achieved over the years will be consolidated within the region whilst preserving liquidity, lowering costs and re-prioritising strategic growth actions,” the company said in a statement.
In the period under review, ART’s overall volumes for the quarter increased by 52% compared to the same period last year as volumes across the divisions recovered in line with the improved economic activity.
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Export earnings, according to the update, were marginally ahead of the prior year with paper export volumes into the region showing signs of recovery with year-to-date sales volumes 15% ahead of prior year.
“Year to date revenue grew by 384% in historical terms and by 39% in inflation adjusted terms compared to the same period last year.
“The group’s performance in the batteries division remains resilient whilst other business units were severely impacted by the COVID-19 pandemic,” ART said, adding that the pressure on margins persisted during the period necessitating increased focus on cost containment and efficiency improvements.
In terms of divisions, Art said its Chloride batteries business, headed by Kudzai Pasipanodya, continued to realise the benefits of its capitalisation programme as improved product availability across most product lines resulted in a 37% volume growth during the quarter. The exports at Chloride were maintained at prior year levels.
“The paper segment, Kadoma Paper Mills, National Waste Collections and Softex registered a moderate volume increase of 11% compared to the prior year. The delay in payments from the foreign currency auction coupled with logistical and raw material supply constraints necessitated commercial downtime with major repercussions on operating efficiencies, fixed cost absorption and profitability,” ART said.
Eversharp volumes for the quarter recovered by 255% compared to the prior year which had limited trading because of the hard lockdown.
ART said Eversharp continues to break even with improved volumes across the market despite the continued uncertainty of the school calendar.
Timber volumes increased by 27% as demand remained firm.
