Africa-Press – Zimbabwe. DIVERSIFIED manufacturer, Amalgamated Regional Trading (ART) Holdings Limited’s fragile half-year profit recovery is now under severe threat, as third-quarter turnover slumped, exports collapsed and costly mill closure obligations weighed heavily on performance.
In its half year performance ended March 31, 2025, ART posted a net profit after tax of US$378 000 compared to a loss of US$135 000 in the prior year.
That profit was only realised owing to a tax credit of US$311 000, as the firm’s revenue declined by 14% year-on-year during the period due to weak demand in key sectors and heightened competition.
Now, in its third quarter ended June 30, 2025, ART reported a decline in turnover as overall sales volumes slumped.
“The group’s overall sales volumes declined by 7% during the quarter as trading remained subdued,” ART chief executive officer Milton Macheka said in a statement attached to the third quarter report ended June 30, 2025.
“Turnover for the quarter was US$7,8 million, a decline of 23% compared to the prior year, largely due to reduced export volumes and power-induced product shortages.”
He said export volumes fell by 32%, with margins further eroded by the reduction in the foreign currency retention threshold to 70% from 75% by the central bank.
“The mothballing of operations at the mill has resulted in material closure costs and related obligations, significantly weighing on the group’s financial performance,” Macheka said.
“Environmental and market conditions have not improved sufficiently to support the viability of the operation, necessitating consideration of discontinuation.
“Management anticipates that ongoing discussions with potential partners and key stakeholders will be concluded by year-end.”
During the third quarter, the firm reported that the trading environment was relatively stable, characterised by local currency liquidity constraints, reduced demand and intense price competition.
Further, electricity supply challenges continued to impact production, with operating costs, as alternate power sources, remaining expensive.
ART also noted a tight monetary policy, with high borrowing costs.
Under its energy storage segment, battery volumes were 3% below the prior year as product availability continued to be affected by power challenges.
“Competition from imports exerted pricing pressure in both the industrial and automotive battery segments. Margins were further compressed by higher lead prices and increased energy costs,” Macheka said.
For the stationery and paper division, volumes declined by 18% compared to the prior year as trading and cash flows were affected by challenges faced by major retailers.
“Stock movement improved across most outlets and volume recovery is anticipated. Ongoing interventions by the authorities to curb illicit imports have helped reduce counterfeit products and pricing distortions in the market,” the ART CEO explained.
“The blended manufacturing and trading model for major product lines ensured continued brand presence. The deliberate decommissioning and optimisation of our tissue converting machinery, in response to market overcapacity is expected to restore profitability.”
However, regarding its timber business, better demand and improved milling efficiencies resulted in a 25% increase in sales volumes compared to the prior year.
Macheka said this division would maintain its strong financial performance to the end of the year.
“Notwithstanding these challenges, the group remains fully focused on safeguarding liquidity and restoring profitability, underpinned by firm demand in batteries and timber, operational improvements, and disciplined cost management.”
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