ART Holdings Limited – Abridged Reviewed Financial Results for HYE 31 March 2023

By Published On: June 20th, 2023Categories: Corporate announcement, Earnings
Art Holdings Limited 2023 Interim Results For The Half Year

ART Holdings Limited ( HY2023 Interim Report



The macro-economic environment during the period was volatile and characterised by frequent policy changes. There was a significant disparity between the increase in the exchange rate and the official inflation rate. The depreciation of the local currency in the second quarter resulted in the widening of the gap between the official auction market exchange rates and the alternative market. There was increased preference to transact in foreign currency in the period, as the existence of multiple exchange rates resulted in pricing distortions. Power outages severely affected the Group as the back-up generators in place do not meet the total demand of the manufacturing plants. The prevailing high borrowing costs impacted liquidity and consumer demand.

In Zambia, the Kwacha depreciated ahead of the conclusion of the country’s debt restructuring symptomatic of underlying economic issues as evidenced by the increasing trade deficit. The annual rate of inflation increased to 9,9% in March 2023. Demand for bulk tissue and batteries remained firm during the period.


The Group faced significant challenges as a result of the volatility of exchange rates and power outages. The agility of our batteries, stationery and timber businesses enabled us to adapt and maintain operations despite the uncertainty in the environment. Overall volumes declined by 9% from prior year. Opportunities for growth could not be exploited due to powerinduced product supply limitations and value preservation measures taken to restrict sales through channels with unfavourable credit terms. The capitalisation of the paper units was completed although power and raw material shortages affected production. The widening of the product range to include virgin tissue will improve efficiencies and eliminate raw material shortages as pulp is readily available from South Africa.


The financial performance review is based on the inflation adjusted financial statements. The Group estimated and applied inflation rates for February and March 2023 based on the Total Consumption Poverty Line published by ZIMSTAT in order to comply with International Financial Reporting Standard 29 which permits estimation where a general consumer price index is not readily available. Historical cost financial statements have been presented as supplementary information.

The Group recorded revenues of ZWL$15 billion in inflation adjusted terms an increase of 42% compared to the prior year. Overall volumes for the 6 months to 31 March 2023 declined by 9%. The frequent price movements in response to inflation and the depreciation of the local currency affected trading and demand. Export volumes fell by 30% due to product shortages and the prioritisation of the local market.

Group margins at 43% remained strong despite pressure from rising operating costs. Profitability was dampened by once off reorganisation and plant optimisation costs in the paper business. The delay in the completion of the Paper projects necessitated the restructuring of borrowings further increasing the Group’s exposure to adverse exchange rate movements. An exchange loss of ZWL$1,976 billion was recorded during the period.

Overall hard currency sales increased and improved the ability of the business to meet its foreign currency commitments. This, however, had a significant distortive impact on the Group’s profitability as foreign currency sales are recognised at the official auction exchange rate. The Board estimates that for the half year the Group’s revenues at USD22,2 million declined by 8% compared to prior year whilst operating profit decreased to USD$1,3 million.


The Batteries division was affected by loadshedding and suffered a 5-week fire induced outage at the Workington factory. Export orders were suspended as the local market was prioritised during this period. Volumes fell by 8% compared to prior year. Contingency measures were put in place with support from partners to reduce the backlog of orders for solar and industrial batteries. Demand in the region remained strong however foreign currency shortages persisted in Malawi.

Paper volumes decreased by 17% compared to the same period last year. The new Tissue Mill PM2 was successfully commissioned but could not be run fully during the period. The tissue product range was broadened following successful trials of virgin pulp. This has mitigated the risk posed by the erratic supply of wastepaper from the local market. The focus on cost containment and efficiencies is expected to restore profitability in the second half of the year. The export order book for bulk tissue is firm whilst tissue sales in the local market continue to be impacted by the unfavourable terms in the formal retail sector.

Eversharp pen volumes decreased by 7% from prior year due to raw material supply chain delays and power shortages. The division has retooled and should avert product supply challenges in the second half. Eversharp has benefited from the strong performance in the informal sector and the availability of stationery trading lines.

Timber sales volumes declined by 26% compared with the prior year as the business opted to preserve value given the pricing distortions that characterised the market. The division launched its industrial pallets and closed the period with a firm order book. The investment in a grader and other fire equipment has bolstered preparations for the dry season.


The Group’s sustainability initiatives continued to be focused on preservation and responsible value addition within our environment. Our waste collection network in paper and batteries was expanded to cover Malawi and Zambia during the period. Collaborative partnerships have been established with other waste collectors to improve efficiencies. The Chloride factory lead emissions continue to reduce in line with improvements in systems and handling.


The Company is not in a position to declare a dividend.


The Board appointed Mr Tae In Baik as a Non-Executive Director with effect from 1 December 2022. Mr Baik holds a Bachelor in Civil Engineering from Yonsei University (South Korea) and is the Chief Executive Officer of Taesung C&I Limited.

The Board would like to congratulate Mr Baik and wish him every success in his new role.


The Group anticipates a difficult environment in the second half of the year and will continue to exercise caution in its growth initiatives and ensure value preservation. The strides taken to reduce expensive short-term debt and sustain working capital in the first half of the year will be consolidated. The banks will continue to be engaged for liquidity support to unlock the potential of the new plant in Kadoma. The Group has a solid, mutually beneficial relationship with its primary lender, accounting for 62% of the foreign currency exposure. This allows for a steady funding platform and essential liquidity for the business. The prevailing turbulent conditions affected the completion and stabilisation of the paper projects. However, the Board remains confident that they will have a positive impact in the long term.

The Board has assessed the market conditions and believes there remains a compelling case to move to the Victoria Falls Exchange in terms of trading costs and reporting. The Group is monitoring developments and has in the meantime chosen to focus on business stabilisation and recovery given the frequent policy changes in the environment.


I would like to express my sincere gratitude to our customers, suppliers, bankers and other key stakeholders, my fellow directors, management and the entire team at ART for the continued contribution and support during the period under review.

T U Wushe
30 May 2023

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