By Stephen Chandisareva
HARARE – Amalgamated Regional Trading (ART) posted a rise in inflation adjusted revenue for the first quarter ended 31 December 2024, with a year-on-year increase of 67% to $58.9 billion.
Like any other business, ART was not spared from exchange risks.
“The operating environment worsened during the quarter with the local currency instability and the significant disparity between the interbank exchange rate and prevailing market rates leading to pricing challenges and margin erosion on exports.
“The export proceeds surrender requirement poses a threat to the viability of exports under the prevailing economic conditions,” Milton Macheka, group chief executive officer, said in a trading update.
In the period, authorities attempted to reconcile the policy contradictions on formal and informal market activities.
This relates to currency rates, pricing and taxation.
“Market demand was subdued as local currency liquidity tightened and divergent exchange rates impacted pricing,” the company said.
“In Zambia inflation increased due to the depreciation of the Kwacha, increased energy prices and commodity supply constraints.”
Volumes, a key indicator of demand, fell 9% in the period under review.
“…with significant reduction in paper, where the tissue converting unit was shut down for 2 months to allow for its relocation to Kadoma,” Macheka said.
“Export volumes declined by 7% as paper exports were curtailed, in order to minimise the impact of the foreign currency surrender requirements given the prevailing unfavourable market rates.”
It also comes as the company experiences raw material and power challenges.
“The group faced worsening economic headwinds which impacted raw material availability, operating costs and liquidity. Power availability improved during the period,” he said.
As for divisional performance, battery volumes declined by 14%.
Sales volumes of paper were mainly from stock and were 53% below the prior year at 622 tonnes during the period.
Volumes at Eversharp rose 19% to 15 188 000 units underpinned by improved product availability.
At Mutare Estates, timber volumes surged 16% to 2,583 cubic meters on firm demand and improved efficiencies.