Art’s restructuring pays off


New equipment to improve the quality of tissue and reduce cost of inputs was installed at the beginning of last year, improving volumes in both local and export markets.

ART Holdings’ Zimbabwe based-businesses experienced an 8 percent growth in turnover and volumes, in the period between October 2015 and January 2016.
This follow after a restructuring engineered by majority Taesung Chemicals after it increased its shareholding in the company.  Taesung Chemical Co (Taesung) has increased its shareholding in ART Corporation to over 55 percent. The Korean firm, through its wholly owned subsidiaries Cranbal Investments, Silvermine Investments and Zadmab (Private) Limited, now holds 55.33 percent of ART, with 258,578,541 shares after buying 44,758,020 during the offer which opened on March 30 and closed after 30 days last year. The remaining 44.67 percent is still in the hands of minorities.

The company’s Zambian based business however recorded a 32 percent loss. Speaking at the group’s AGM, ART’s Chief Executive Officer Tapiwa Ameer said the realisation of a loss in Zambia was a deliberate move by the group as it was seeking to close down some of its Zambian businesses.
“Eversharp recorded the biggest movement in the period under review, showing a 23 percent increase in sales volumes,” said Ameer.
“21 million pens were sold during this period compared to 17 million sold in the same period last year.”
The paper division, comprising of Kadoma Paper Mills, recorded a 7 percent rise in sales volumes, from
1,247tonnes last year to 1,339t in the current year while Softex recorded a one percent increase in sales.
New equipment to improve the quality of tissue and reduce cost of inputs was also installed at the beginning of last year, improving volumes in both local and export markets.
Batteries sales volumes also rose by 6 percent, from 79,525t last year to 84,296t this year.
Ameer said the group’s operating costs had fallen by 14 percent and attributed this to the retooling and restructuring exercise the group had carried out such as the consolidation of the Battery Express business unit into Chloride.
The operating profit for the period under review rose to $1.4 million from $204 000 in the same period last year while a profit before tax of $901 000 was recorded against a prior year loss of $215 000 loss.
“Cashflow remains tight, and this is mainly because of legacy issues, especially debt legacy issues,” added Ameer.
The CEO said the group’s debt which stood at $7 million has been reduced and currently stands at US$6.5 million although the debt restructuring exercise is still ongoing.
For the year ended September 30, 2015, ART recorded a profit before tax of $150 000, from a loss before tax of $723 000 in the previous year.
Outgoing board chairman Moses Chundu (who will be replaced by Thomas Utete) said this improvement in the group’s performance was to be attributed to the recapitalisation of the factories, production efficiencies and focus on cost containment.
“I am pleased to report an improved performance by the group, achieved under difficult market conditions,” said Chundu.
In the same period, the group recorded revenue of $29.8 million, an increase of 4 percent compared to the prior year. Margins also improved to 35 percent from 33 percent in 2014, reflecting the group’s strategy to increase factory efficiencies in the manufacturing business.
The battery, tissue and pen sales in the domestic market recorded a volume growth while marginal decreases of 3 percent in volumes were recorded in pen export sales and battery sales in Zambia.
The period recorded an 8 percent decrease in operating expenses due to the group’s strategy to streamline operations. FinX

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette