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– Chronicle

DIVERSIFIED industrial group, ART Corporation, has acquired Nampak’s shareholding in Softex under a US$4,8 million deal.

The decision is in line with ART’s five-year turnaround strategy that has seen the group entering its second growth phase supported by consolidation of immediate past gains and the capitalisation of the paper business.

In a statement accompanying financial results for the half-year ended March 2021, ART Corp said the transaction would consolidate and capitalise the paper business going forward.

“The group is pleased to advise that the offer to acquire Nampak’s shareholding in Softex, a jointly-owned business, was accepted and the acquisition was completed in May 2021,”

said the company.

“The consideration of US$800 000 will be paid in six equal monthly instalments.

“The transaction will enable the consolidation and capitalisation of the paper business going forward.”

During the period under review, the group posted revenues of ZWL$1,764 billion in inflation-adjusted terms, an increase of 14 percent compared to the same period last year.

Overall volumes for the half-year period increased by 15 percent while the battery business registered a strong performance with volumes increasing by 22 percent due to consistent product availability and improved efficiencies following the commissioning of additional plastic injection machinery.

However, ART Corp said its export competitiveness faces risks associated with perceived policy inconsistencies, volatile exchange rates and supply interruptions.

“The group remained adaptable and managed to increase export volumes by 13 percent compared to the same period last year.

“Gross margins declined from 50 percent to 39 percent as prices could not be aligned to input cost increases in the short-term,”

said the company.

“Operational expenditure increased by 67 percent compared to the prior year.

“The group’s operating profit decreased by eight percent to ZWL$219 million in inflation-adjusted terms compared to last year.”

The paper business also faced significant challenges as activity declined especially during the Covid-19-induced lockdowns.

Despite management’s cost containment initiatives, the paper divisions struggled to contain the rising input costs and recorded losses of ZWL$52 million in inflation adjusted terms.

“Softex tissue volumes declined by 14 percent compared to the prior year as demand weakened and competition from imports increased,”

said the company.

“Detergents’ volumes continued to grow in both the domestic and industrial market sectors on the back of consistent product availability and increased uptake by the market.

On Mutare Estates, ART Corp said the unit performed well as timber demand remained firm. As a result, the group continues to exercise caution with respect to its foreign currency exposure.

“While sufficient short-term facilities were established, the interest rates remain punitive. The deliberate stocking of raw materials to cushion logistical delays was sustained during the period. Cashflows remained strained and limiting capital expenditure to essential spend remained a priority,”

said the company.

During the period under review, ART Corp successfully commissioned additional injection moulding machinery at its chloride factory, which improved efficiencies and significantly reduced imports.

“The progressive improvement of the manufacturing equipment will enable the battery business to respond, participate and gain from market developments and the attendant opportunities,”

it said.

On the outlook, the group said it will continue to seek opportunities to balance growth and broader representation in terms of products, markets and energy storage technologies.

It said the Government’s thrust to contain inflation and reduce currency volatility has enhanced recovery prospects across all the business segments.

“The business remains confident that it has significantly improved its ability to anticipate and respond to challenges and opportunities.

Employee morale and engagement are key focus areas of our Covid-19 response strategy and will be maintained as part of the initiatives to safeguard the health and safety of our workforce.

“The group has adequate resources to sustain the business as a going concern in the foreseeable future,”

said ART Corp.

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