Improved exports spur ART

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AMALGAMATED Regional Trading (ART) says it performed above expectations in the year to March 31, 2019 after it achieved a 30 percent increase in exports, despite a depression in local demand for its products.
The diversified conglomerate reported a profit after tax of RTGS$8,68 million, up from RTGS$3,69 million recorded in the previous comparable period, following a 34 percent increase in revenue to RTGS$29,6 million.
Thomas Wushe, ART’s board chairman, said this was achieved despite a decline in local sales volumes “as consumer purchasing power was eroded by inflation”.
“The operating environment deteriorated significantly during the period due to increased foreign currency allocation challenges and inflationary pressures emanating from the instability of multiple exchange rates in relation to the local currency,” he said in a statement accompanying the company’s results.
“The group, however, maintained a positive performance in spite of the depressed demand which affected volumes across the business units.”
Zimbabwe’s official inflation, which was reported at 97,9 percent in May, had climbed to 66,8 percent by March 2019 from 2,7 percent in March 2018. Incomes on the other hand, have remained relatively subdued.

Still, ART’s gross margins increased by two percentage points from prior year to 45 percent after the company’s export sales volumes in the region increased by 30 percent as its “focus on foreign currency generation initiatives yielded positive results”.
While the company’s battery sales volumes decreased by 15 percent during the period under review, Chloride Zambia’s volumes increased by 30 percent “on the back of aggressive selling effort”.
And even though Kadoma Paper Mills’ volumes were four percent lower “as a result of reduced plant availability owing to intermittent power supply”, export volumes for the paper division increased by 15 percent.
Starting before 2017, the business had been negotiating offshore trade facilities and increasing exports in order to sustain operations.
And by September 2018, the focus on exports had diluted margins as the company’s penetration pricing strategies were implemented in the regional markets, a move that now seems to be paying off.
Wushe, however, said the rising inflationary pressure on the “cost of raw materials and other production costs is expected to exert pressure on margins going forward”.
“The group will continue to focus on exports whilst prioritising value preservation as the challenges in the economic environment are expected to persist.”
Meanwhile, ART said it was not in a position to declare a dividend as it is focusing on settling outstanding foreign creditors and funding capital expenditure projects.
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