Art profit up 42pc

HARARE - Listed diversified group ART Corporation (ART) profit after tax in the year to September 2017 went up by 42 percent to $2,9 million from $1,7 million in the same period last year, largely driven by improved business across its business units.

The group’s chairperson Thomas Wushe on Tuesday said Art’s batteries division achieved an operating profit of $3,8 million due to a 25 percent increase in factory sales volumes and 41 percent increase in sales volumes at Exide Express as the units realised the benefits of the new plant commissioned in September 2016.

“The division also benefited from the impact of Statutory Instrument 20 of 2016 and the foreign currency challenges which limited battery imports.

“The Zambia business recorded an operating loss of $67 000 due to low market uptake in 2017,” he said.

The group’s paper division achieved an improved performance in the period under review recording a consolidated operating profit of $229 000 compared to a loss of

$227 000 in 2016 as a result of factory efficiencies and improved sales volumes.

Wushe noted that Eversharp continued to perform well, recording an operating profit of

$916 000 compared to $763 000 in the prior year due to a growth in export volumes.

“The Mutare business recorded an operating profit of $138 000 against a loss of $3 000 in prior year.

“This was driven by a 23 percent increase in timber sales volume as demand for timber firmed,” he said.

Consequently, ART’s revenue increased by 13 percent to $33,5 million as a result of strong demand and improved product availability, while gross margins improved to 42 percent compared to 37 percent in 2016.

Wushe further indicated that an operating profit of $5 million was achieved for the year compared to $3,7m posted in 2016 representing an increase of 36 percent.

In turn, he said, operating expenses increased by 23 percent mostly due to increased marketing and distribution spend.

“The balance sheet grew by 25 percent due to increased profitability,” Wushe said, adding that new import substitution machinery valued at $2,1 million was bought and commissioned in the Chloride division while efforts were made to reduce the working capital gap.

Consequently the gap reduced by 30 percent to $4,8 million.

“Cash generated from operations decreased by 38 percent to $3,4 million as significant cash generated was used to pay creditor obligations and correct working capital levels in the divisions.