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ART, which posted a US$6,3 million after tax loss, believes it can return to profitability by focusing on its Chloride, Battery Express, Chloride Zambia, Kadoma Tissue Mills, Eversharp and Softex Tissues business units.

Its flagship, Mutare Board and Paper Mills, did not operate during the year and was put under care and maintenance to cut down operating costs.

ART said US$1,4 million had paid for retrenchment packages for workers at Mutare Board and Paper Mills while the company was considering ways of disposing of the paper manufacturer’s assets. During the year under review, operations at Mutare Board and Paper Mills were limited to selling timber.

Operations discontinued during the year included business units in South Africa, Zambia and Botswana. The cost of discontinuing the operations was about US$1million.

ART said profitability was also affected by high interest rates which cost the company US$1,4 million.

“ART recorded a loss after tax of US$6,3 million and of this loss, US$2,4 million was attributed to discontinued operations which included a retrenchment cost of US$1,4 million in the Mutare operation. The loss after taxation from continuing operations was US$3,9 million,” the company said.
While turnover from continuing operations increased by 26 percent in the previous year, the margins fell to 26 percent from 32 percent owing to low margins in the stationery division.

“ART raised US$4,4 million through a rights issue during the first half of the year. US$3,9 million of the proceeds were applied to debt and US$0,5million to replacing the chloride smelter and commissioning of the chloride furnace is in progress and should be completed by end of December 2010.”

The Zimbabwe Stock Exchange-listed firm achieved 52 percent capacity utilisation compared to 31 percent attained in 2009.

“The Kadoma tissue mill made a loss of US$79 000 with volume growth of 30 percent on prior year. While the order book for tissue remained strong, performance was affected by power supply disruptions.

Currently the tissues machine is operating at 80 percent capacity utilisation, which was enhanced by upgrade to the machine.”

The firm’s Eversharp business recorded a growth in volumes with the brand remaining dominant in the local market.
Excess production was channelled to lower margin regional export markets. The business recorded a loss of $225 000 due to under-recoveries in the factory.

ART said its Fleximail division’s performance was disappointing as the business recorded a loss of US$2,4 million due to the misalignment between turnover levels and a high cost base.
“The low capacity utilisation of 30 percent achieved during the year resulted in high under-recoveries. Competition from imported products restricted volume growth and resulted in a decline in margins. The focus in 2011 will be to turn around the performance of Fleximail through keeping the costs down while gradually increasing turnover,” the firm said.

Its trading unit, AT Intertrade, posted a loss of US$312 000 as turnover was below expected levels and non-performing retail outlets in the outlying areas were closed.
During the year, the firm’s battery division also posted a loss of US$589 000 emanating from the chloride factory and the Malawi operation.
The chloride factory operated at 46 percent capacity utilisation, which was an improvement on the 23 percent recorded in 2009, but was inadequate to secure a full recovery of factory costs.